A new report unveiled Thursday from TransUnion revealed fraud attempts targeting the financial services industry have spiked since the beginning of 2021. Compared to the last four months of 2020, the percentage of suspected global digital fraud attempts in financial services increased 149% during the first four months of this year.
In the U.S. specifically, financial services fraud attempts increased 109%, the global information and insights company said. The top type of fraud targeting financial services was true identity theft, which TransUnion defined as when a consumer uses a stolen identity to commit fraud, with the victim being a real person.
Of all the industries analyzed by TransUnion, financial services came out as fraudsters’ top target. The rate of suspected digital fraud attempts rose 24% across all industries globally when comparing Jan. 1 to May 1, 2021 with Sept. 1 to Dec. 31, 2020; in the U.S., the percentage of fraud attempts across industries increased by 25% during the same time period, according to TransUnion.
Industries with the second and third highest percentage increases in suspected global digital fraud attempts during that time period were travel and leisure (25.03%), with the top type of fraud being credit card fraud; and gaming (9.24%), with gold farming identified as the top type of fraud. Gold farming refers to the practice of acquiring virtual currency through online gaming and then selling it for real currency.
TransUnion also identified the three industries where suspected global digital fraud attempts declined the most during that time period: Logistics (-32.74%), which primarily sees shipping fraud; insurance (-16.35%), where suspected ghost broker fraud – the selling of fake, cheap auto insurance policies – is most popular; and retail (-8.33%), which sees promotion abuse the most.
“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,” Melissa Gaddis, senior director of customer success, Global Fraud Solutions at TransUnion, stated. “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.”
With more and more consumers using digital financial services as a result of the COVID-19 pandemic, TransUnion emphasized that security in the financial services marketplace is especially important. In a TransUnion-commissioned late September 2020 survey, 40% of consumers with a financial account said they are using digital platforms more frequently since the onset of the pandemic, and 60% of consumers said the majority of their financial transactions are conducted via mobile applications.
“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,” Shai Cohen, SVP of Global Fraud Solutions at TransUnion, said. “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’s findings on fraud against businesses were 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.