TransUnion releases global report on annual digital fraud trends
The continuous growth of e-commerce could be behind a surge in shipping fraud, which is now the fastest growing type of digital fraud worldwide, according to TransUnion’s (NYSE: TRU) 2022 Global Digital Fraud Trends Report. TransUnion observed an influx in shipping fraud in 2021, resulting in a 780.5% year-over-year (YoY) global increase. When compared to a two-year timeframe from 2019 to 2021, TransUnion data shows shipping fraud grew more than 1,500+%.
Shipping fraud – defined as when a buyer spoofs a shipping address or when a seller receives payment for goods or services, but never ships to the buyer – has quickly emerged as one of the top fraud types across a variety of industries. This issue, however, was most prominent in the logistics industry where consumers purchase goods online and are then reliant on third-party carriers for transportation and delivery of items.
“As consumers shifted from brick-and-mortar retailers to e-commerce platforms over the course of the pandemic, fraudsters gravitated toward areas where consumers were increasingly spending both time and money,” said Shai Cohen, senior vice president and global head of fraud solutions at TransUnion. “Online shopping has become the ‘new normal’ on a global scale and as a result, the propensity for shipping fraud has also increased.”
As consumer adoption of digital channels has continued to accelerate, the global rate for all types of suspected digital fraud attempts increased 9.4% YoY from 2020 to 2021 and 52.2% from 2019 to 2021. In addition to shipping fraud, other types of fraud that experienced large increases when comparing 2020 to 2021 include business identity theft (+113.8%) and identity mining / phishing attempts (+104.8%) which both showed high rates of annual growth. According to TransUnion’s recent survey of 12,500 adults worldwide, 62% of consumers reported identity theft as their greatest concern when it comes to digital fraud.
Common Fraud Types Increased Across Industries from 2020 to 2021
“Nearly half of all consumers worldwide surveyed by TransUnion said they are conducting the majority of their transactions online, covering everything from managing personal finances and shopping to conducting business matters, which has led to an elevated consumer expectation in terms of both experience and security. To effectively mitigate digital fraud risks, businesses should ensure there are strong authentication processes in place as well as streamlined technology and multi-layered identity solutions. These solutions will help build trust with customers and thwart these fraud tactics,” said Cohen.
Download the 2022 Global Digital Fraud Trends Report to learn more. Specific country and regional data in the report include the United States, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, the Philippines, Puerto Rico, South Africa, Spain and the United Kingdom.
Top Industries Targeted by Suspected Digital Fraud in the United States include Gaming, Travel and Leisure
While shipping fraud spans a plethora of industries, certain business sectors tend to be more prone to digital fraud attempts. In the United States, the gaming industry saw the largest percentage of annual fraud growth in 2021 with an increase of 60.3% YoY. Travel and leisure (58.4%) and telecommunications (29.5%) were the second and third industries with the largest growth in the rate of suspected digital fraud attempts. Financial services was another significantly affected industry and increased 27.2% YoY, a level that remained below the global growth rate of 33.5%, while insurance (11.1%) rounded out the top five.
Globally, financial services, and travel and leisure ranked as the top two rated industries with the largest growth in the amount of suspected digital fraud attempts. This became especially prevalent as economies normalized from the height of the pandemic and tourism resumed. Digital fraud in the travel and leisure sector saw the greatest YoY increase and grew 68.4% with credit card fraud as the predominant type – which is where a customer uses a fake or stolen credit card for a purchase, resulting in a chargeback to the site.
Year-over-Year Growth Rates of Digital Fraud Attempts (2020 – 2021)
Digital fraud in financial services remains a prime target for fraudulent activity worldwide and grew 33.5% YoY, making it an increasing area of concern for businesses and consumers alike. The number one fraud type in financial services is true identity fraud – where the victim is a real person and a fraudster uses a stolen identity to commit fraudulent transactions. As such, many financial institutions have taken steps to put greater security measures and authentication solutions in place, especially since digital banking is regarded as the industry standard.
“Fraud continues to impact a variety of different business sectors and fraudsters are always looking for the next opportunity. However there are some industries that continue to have a target on their backs – such as financial services or travel and leisure – that should preemptively employ fraud detection solutions and strategies to better serve customers and protect their bottom line,” said Sean Donnelly, senior vice president and go-to-market global fraud solutions at TransUnion.
TransUnion came to its conclusions about fraud against businesses 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™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions that were assessed for fraud.
For more information and insights on global fraud trends, please download the report.