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As COVID-19 Lockdowns Lift, Fraudsters Shift Focus

Blog Post09/07/2021
Fraud and Identity Management
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 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 Canada, the percentage of digital fraud attempts increased at a  higher rate of 44.9% 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, suspected 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 29.7% in Canada (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 Canada, during the same time periods, these rates rose 209.8% for gaming and 216.1% 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

-49.2%

Shipping fraud

Telecommunications

-30.8%

True identity theft

Insurance

-16.7%

Suspected ghost broker

Fraudsters capitalize on new opportunities as travel begins to reopen

While volumes remain lower than pre-pandemic levels, travel has seen an increase. Cybercriminals are taking note and acting accordingly. “Fraudsters tend to seek out industries that may be seeing an increased 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 appear to have made this industry a top target,” noted Cohen. 

In addition to leveraging credit card fraud (the top type of digital fraud reported to by TruValidate travel and leisure customers), fraudsters are also quickly adapting to target travelers.

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 surveyed consumers in Q2 2021. Phishing is a cybercrime that uses methods like email, text messages and websites to steal personal information, which criminals use to commit identity and financial crimes. Stolen credit card or fraudulent charges was the second most cited type of COVID-19-related online fraud, affecting 24% of global surveyed consumers. For more digital fraud findings, see our infographic.

Suspected Digital Fraud Attempt Rate Increasing Worldwide

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

“One in three people globally report 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 ensure their customers have an appropriate level of security to trust their transaction are safe while enjoying 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 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 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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