CHICAGO–As more consumers continue to go online for banking and other financial transactions, from TransUnion has found fraudsters are ramping up their efforts in the financial services industry.
According to TransUnion, when comparing the last four months of 2020 and the first four months of 2021, the percentage of suspected global digital fraud attempts in financial services increased
149%.
In the U.S., financial services fraud attempts increased 109%, the report added.
TransUnion said across industries, the rate of suspected digital fraud attempts globally rose 24% when comparing the first four months of 2021 with the last four months of 2020. In the U.S., the percentage of fraud attempts increased at a similar rate (25%) during the same time period.
TransUnion said it monitors digital fraud attempts reported by businesses in varied industries such as gambling, gaming, financial services, healthcare, insurance, retail and telecommunications, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite, TransUnion TruValidate.
‘Not the Time to Relax’
“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 are seeing more financial services organizations implement fraud prevention solutions with some success, though our findings make it clear that this is not the time to relax. As lenders increase their customer acquisition efforts in an increasingly digital environment, fraud mitigation needs to be a part of every marketing campaign. Financial institutions also need to do even better to ensure they are providing a secure marketplace that offers friction-right experiences to consumers.”
The company noted a secure marketplace is of special importance as COVID-19 accelerated the shift to digital financial transactions. In late September 2020, 40% of consumers with a financial account said in a TransUnion commissioned survey that they are using digital platforms more frequently since the onset of the pandemic. The same survey found 60% of consumers said that the majority of their financial transactions are conducted via mobile applications.
Examining Fraud & Impact
TransUnion said it analyzed industries with the highest increases and declines in the percent of suspected digital fraud attempts against them, comparing the periods of Sept. 1-Dec. 31, 2020 and Jan. 1-May 1, 2021.
Top Suspected Digital Fraud Rate Attempt Increases and Declines by Industry
| 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 |
TransUnion defines true identity theft, the top type of digital fraud in financial services, as the consumer using a stolen identity to commit fraud with the victim being a real person. The second and third most reported type of digital fraud by TransUnion financial services customers are first party application fraud and account takeover, respectively, the company said.
‘Interesting Dynamic’
“An interesting dynamic is playing out where we are seeing other industries facing far fewer suspected fraud attempts than what has been observed in financial services. In some cases, we are seeing a decline in such fraud attempts,” said Melissa Gaddis, senior director of customer success, Global Fraud Solutions at TransUnion. “The key takeaway for businesses is that fraudsters do not 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 simply conducted at random simply to determine if businesses are prepared to meet their challenges.”