CHICAGO (Globe Newswire) — The global digital fraud rate decreased in Q1 2022 with suspected online fraud attempts declining -22.6% from the same quarter last year. TransUnion’s quarterly digital fraud analysis observed the suspected fraud rate year-over-year declined in industries such as financial services, telecommunications and retail while fraudsters significantly increased their scams in sectors such as gambling, insurance and logistics.
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.
“Sophisticated fraudsters pressure test which industries have ramped up fraud prevention measures and as a result, turn to new industries if efforts are being thwarted. That’s exactly what we have observed recently as fraudsters look for new opportunities or points of vulnerability,” said Shai Cohen, senior vice president of global fraud solutions at TransUnion. “It is paramount that during this dip companies focus on optimizing the customer experience for good customers.”
Fraud Attempts Shift to New Industries
|Industry||Fraud Rate Change from Q1 2021 to Q1 2022|
|Travel and Leisure||+13.3%|
|Communities (online dating, forums, etc.)||-6.1%|
Consumers also say they are being targeted less with digital fraud, according to the recent TransUnion Consumer Pulse Survey. The survey of 10,391 adults in select countries and regions globally from Feb. 7-23, 2022 determined that 36% had been targeted by digital fraud in the last three months compared to 38% the previous quarter. Of those consumers that had been targeted, phishing scams were most common (31%) followed by money/gift card scams (28%) and third-party seller scams on legitimate online retail sites (23%).
Rate of Digital Fraud Attempts Decreases
The overall rate of suspected fraud originating from the U.S. decreased -23.1% from Q1 2021 to Q1 2022 across all industries. The financial services industry saw the largest YoY decrease in the suspected digital fraud attempt rate at -56.6%. When fraud in financial services did occur, it was most likely the result of first party application fraud, which happens when an individual completes a fraudulent application(s) that contains intentionally inaccurate or manipulated information with the intention of receiving a lower rate or better terms for a policy or contract.
Certain business sectors, however, were more prone to digital fraud attempts with the logistics industry exhibiting the greatest YoY growth in Q1 2022 (45.9%) – possibly reflecting fraudsters trying to take advantage of the continued challenges within that industry as retailers struggle to ship goods in a timely manner. The logistics industry was mostly impacted by shipping fraud – which is when a buyer spoofs a shipping address or when a seller receives payment for goods or services, but never ships to the buyer. The gaming industry saw the second largest increase in the rate of suspected digital fraud in Q1 2022, growing 27.2% YoY.
“As fraud rates stabilize during a period when fraudsters are searching for new vulnerabilities, many organizations have shifted their focus to identifying more of the good customers and transactions to increase revenue and customer lifetime value. By reducing false positives, false declines, and manual review rates, organizations can dramatically improve the customer experience through trusted connections while still keeping the fraudsters at bay,” said Sean Donnelly, senior vice president and go-to-market global fraud solutions at TransUnion.