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Rate of Suspected Financial Services Digital Fraud Attempts Rise Nearly 150% Worldwide as Digital Transactions Increase

TransUnion
Blog Post06/03/2021
Business
Rate of Suspected Financial Services Digital Fraud Attempts Rise Nearly 150% Worldwide as Digital Transactions Increase

As more consumers go online for banking and other financial transactions, new research from TransUnion found fraudsters are ramping up their efforts toward the financial services industry. When analyzing transactions originating from the US, the rate of suspected digital fraud attempts* against financial services companies increased 109% when comparing the last four months of 2020 (Sept. 1–Dec. 31) and the first four months of 2021 (Jan. 1–May 1). Globally, the percentage of suspected financial services digital fraud attempts increased 149%.

“The rate of fraud attempts are up globally and especially in the financial services industry because fraudsters understand this is where the most high-value transactions are taking place,” said Shai Cohen, Senior Vice President of Global Fraud Solutions at TransUnion. “We’re seeing more financial services organizations implement fraud prevention solutions with some success, though our findings make it clear this is not the time to relax.”

Onset of pandemic associated with shifting consumer behaviors and new fraud threats

A secure marketplace is of particular importance as COVID-19 accelerated the shift to digital financial transactions. In late Sept. 2020, TransUnion found 40% of consumers with a financial account said they’re using digital platforms more frequently since the onset of the pandemic. The same survey revealed 60% of consumers conduct the majority of their financial transactions via mobile applications.

These global fraud insights are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in our flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™.

These findings reveal the percent of suspected digital fraud attempts across industries in the US increased 25% when comparing the last four months of 2020 to the first four months of 2021. Though, the same findings show not all industries are targeted equally when it comes to fraud.

Suspected Digital Fraud Attempt Rate Increasing Worldwide

For more digital fraud findings, see our entire infographic here.

Targeted industries emerge as fraud attempt rate rises

A global analysis of the industries with the largest increases and declines in percent of suspected digital fraud (comparing Sept. 1–Dec. 31, 2020 and Jan. 1–May 1, 2021) shows financial services had by far the largest increase in the fraud attempt rate at nearly 150%, followed by travel & leisure (25%) and then gaming (9%).

Logistics experienced the largest decrease in fraud at -33%, followed by insurance (16%) and finally retail (8%).

Top suspected digital fraud rate attempt increases and declines by industry worldwide

Industry

Suspected fraud percentage change

Top type of fraud

Largest percentage increases

Financial Services

149.44%

True identity theft

Travel & Leisure

25.03%

Credit card fraud

Gaming

9.24%

Gold farming

Largest percentage declines

Logistics

-32.74%

Shipping fraud

Insurance

-16.35%

Suspected ghost broker

Retail

-8.33%

Promotion abuse

A deeper look at key fraud types impacting financial services

Identity theft fraud, the leading type of digital fraud we identified in financial services, is when a consumer uses a stolen identity to commit fraud with the victim being a real person. The second and third most reported type of digital fraud by our customers is first-party application fraud and account takeover:

  • First-party application fraud: A consumer refuses to repay legitimately incurred debts and/or falsely claims to be a victim of identity fraud to evade debt.
  • Account takeover: Someone other than the owner of an account uses the account without permission, indicating the account has been maliciously compromised.

Melissa Gaddis, Senior Director of Customer Success, Global Fraud Solutions at TransUnion, explains the implications these targeted fraud attacks have for businesses looking to mitigate fraud: “The key takeaway for businesses is fraudsters don’t treat every industry equally. They often pick and choose an industry to focus on based on the time of year or what businesses are seeing more transactional activity. At times, fraud attempts are conducted at random to determine if businesses are prepared to meet their challenges.”

How our TruValidate suite helps businesses detect and prevent fraud

TransUnion Global Fraud Solutions unite consumer and device identities to detect threats across markets while ensuring friction-right user experiences. The solutions, all part of the TransUnion TruValidate suite, fuse traditional data science with machine learning to provide unique insights about consumer transactions, safeguarding tens of millions of transactions each day.

*The percent or rate of suspected or risky fraudulent digital transaction attempts are those that TransUnion’s customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

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