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As COVID-19 Lockdowns Lift, Fraudsters Shift Focus

Blog Post08/25/2021
Image showing As COVID-19 Lockdowns Lift, Fraudsters Shift Focus

What’s the impact on digital fraud as countries ease COVID-19 lockdown restrictions? We recently analysed 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 For transactions coming from Hong Kong, the percentage of suspected digital fraud attempts increased at a much higher rate of 62.4% 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 Jerry Ying, TransUnion APAC’s Chief Products Officer.

For example, when looking at logistics, online fraud attempt rates for transactions coming from Hong Kong had risen 199.4% when comparing the periods of March 11, 2019 to March 10, 2020 and March 11, 2020 to March 10, 2021. Yet, when comparing Q2 2021 to Q2 2020, the rate of suspected online logistics fraud attempts has risen at a much lower rate of 3.5%.

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 Hong Kong, during the same time periods, these rates rose 205.6% for gaming and 165.9% for travel and leisure.

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

Industry

Percentage Change Coming From Hong Kong

Top Type of Fraud Globally

Communities (online dating, forums, etc.)

333.3%

Profile misrepresentation

Gaming

205.6%

Gold farming

Travel & Leisure

165.9%

Credit card fraud

Gambling

60.4%

Policy/License agreement violations

Logistics

3.5%

Shipping fraud

Financial Services

-5.7%

True identity theft

Retail

-26.0%

Inappropriate content

Source: TransUnion’s quarterly analysis of global online fraud trends

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

While communities and gaming saw the largest increases in suspected digital fraud, 37% 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, while stolen credit card/fraudulent charges was second, affecting 22% of Hong Kong consumers. For more digital fraud findings, see our infographic.

“One in three people in Hong Kong 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 Ying. “As fraudsters continue to target consumers, it’s incumbent on businesses to ensure customers have an appropriate level of security to trust their transactions are safe while delivering a friction-right experience to avoid 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 seamless user journeys. 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 based on those that customers receiving TruValidate services have either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

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