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As COVID-19 Lockdowns Lift, Fraudsters Shift Focus

TransUnion
Blog Post08/10/2021
Business Fraud and Identity Management
As COVID-19 Lockdowns Lift, Fraudsters Shift Focus

What’s the impact on digital fraud as countries ease COVID-19 lockdown restrictions? We recently analyzed billions of transactions in our flagship identity proofing, risk-based authentication and fraud analytics solution suite — TransUnion TruValidate™ — and found the rate of suspected digital fraud attempts across industries rose 16.5% globally when comparing Q2 2020 and Q2 2021.1 In the US, the percentage of digital fraud attempts increased at a similar rate of 17.1% during the same time period.

As fraud attempts on businesses and consumers continue to rise, fraudsters are pivoting to target industries with growing markets. “It’s quite common for fraudsters to shift focus every few months from one industry to another,” said Shai Cohen, Senior Vice President of Global Fraud Solutions at TransUnion.

For example, when looking at financial services, online fraud attempt rates had risen 149% when comparing the last four months of 2020 to the first four months of 2021. Yet, when comparing Q2 2021 to Q2 2020, the rate of suspected online financial services fraud attempts has risen at a much lower rate of 38.3% in the US (18.8% globally).

Where are fraudsters turning their efforts globally? We found gaming, and travel and leisure rose 393.0% and 155.9%, respectively when comparing the percent of suspected digital fraud in Q2 this year and last. In the US, during the same time periods, these rates rose 261.9% for gaming and 136.6% for travel and leisure.

Global Industry Year-over-Year Suspected Digital Fraud Attempt Rate Increases and Declines in Q2 2021

Industry

Suspected fraud percentage change

Top type of fraud

Largest percentage increases

Gaming

393.0%

Gold farming

Travel & Leisure

155.9%

Credit card fraud

Gambling

36.2%

Policy/License agreement violations

Largest percentage declines

Logistics

-32.74%

Shipping fraud

Telecommunications

-16.35%

True identity theft

Insurance

-8.33%

Suspected ghost broker

Fraudsters capitalize on new opportunities as travel begins to reopen

While volumes remain lower than pre-pandemic levels, travel has seen a significant increase. The daily US Transportation Security Administration (TSA) screenings for many days in April 2020 were below 100,000. However, the busiest day in April 2021 had 1,572,383 screenings, reflecting the growing number of travelers.

Cybercriminals are taking note and acting accordingly. “Fraudsters tend to seek out industries that may be seeing an immense growth in transactions. This quarter, as countries began to open more from their COVID-19 lockdowns, and travel and other leisure activities became more mainstream, fraudsters clearly made this industry a top target,” noted Cohen.

In addition to leveraging credit card fraud (the top type of digital fraud reported to TransUnion by its travel and leisure customers), fraudsters are also quickly adapting to target desperate travelers. Recently, the US State Department temporarily shut down their online booking system for all urgent passport appointments in response to a group of scammers using bots to book all available appointments and sell them for as high as $3,000 to applicants with urgent travel needs.

More than one-third of consumers say they’ve been targeted by COVID-19-related digital fraud

While travel and leisure, and gaming saw the largest increases in suspected digital fraud, 36% of consumers participating in TransUnion’s Consumer Pulse study said they’d been targeted  by a digital fraud scheme related to COVID-19 — across all industries — during Q2 2021.

Phishing was the leading type of COVID-19-related digital fraud impacting consumers in Q2 2021. Stolen credit card or fraudulent charges was the second most cited type of COVID-19-related online fraud, affecting 24% of global consumers.

Suspected Digital Fraud Attempt Rate Increasing Worldwide

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

“One in three people globally have been targeted by or fallen victim to digital fraud during the pandemic, placing even more pressure on businesses to ensure their customers are confident in transacting with them,” said Melissa Gaddis, Senior Director of Customer Success, Global Fraud Solutions at TransUnion. “As fraudsters continue to target consumers, it’s incumbent on businesses to do all that they can to ensure their customers have an appropriate level of security to trust their transaction is safe all while having a friction-right experience to avoid shopping cart abandonment.”

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 businesses unique insights about consumer transactions, safeguarding tens of millions of transactions each day.

1 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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