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Digital fraud attempts on the rise in PH

As more consumers go online for banking and other financial transactions, new research from TransUnion found that fraudsters are ramping up their efforts in the financial service industry. 

Digital fraud attempts on the rise in PH
TransUnion monitors digital fraud attempts reported by businesses in varied industries.
When comparing the last four months of 2020 (Sept. 1 to Dec. 31) and the first four months of 2021 (Jan. 1 – May 1), the company found the percentage of suspected digital fraud attempts coming from the Philippines in financial services increased 50 percent, the highest among all industries analyzed. Globally, the rate of digital financial services fraud attempts increased 149 percent.

Across industries, the rate of suspected digital fraud attempts globally rose 24 percent when comparing the first four months of 2021 with the last four months of 2020. The percentage of digital fraud attempts coming from the Philippines increased 19 percent during the same time.

TransUnion monitors digital fraud attempts reported by businesses in varied industries such as communities, financial services, gambling, gaming, retail, and telecommunications, among others. The conclusions are 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 rate of fraud attempts was up globally and especially in the financial services industry because fraudsters understand this is where the most high-value transactions are taking place. While this industry is traditionally known for in-person transactions, fraudsters have recognized its rapid digital acceleration and are trying to capitalize,” said TransUnion Philippines president and chief executive Pia Arellano. 

“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 the economy begins to open up and perform better, businesses need to do even more to ensure they are providing a secure marketplace that offers friction-right experiences to consumers,” Arellano said.

TransUnion analyzed industries with the highest increases and declines in the percent of suspected digital fraud attempts against them, comparing the periods of Sept. 1-Dec. 31, 2020 and Jan. 1-May 1, 2021.

Interestingly, the telecommunications and logistics industries recorded the two largest declines during this period.  TransUnion’s March 2021 assessment, which analyzed the pre-and post-pandemic declaration periods (March 11, 2019-March 10, 2020 and March 11, 2020-March 10, 2021), found the opposite with telecommunications and logistics having the two largest suspected digital fraud rate increases between the periods respectively. 

Financial services had the third highest increase in the rate of suspected digital fraud during the March analysis, and jumped to the top spot this time. 

TransUnion defines true identity theft, the top type of digital fraud in financial services, as the consumer using a stolen identity (from a victim who is a real person) to commit fraud. The second and third type of digital fraud most reported by TransUnion financial services customers are first-party application fraud and account takeover, respectively.

First-party application fraud is when a consumer refuses to repay legitimately incurred debts and/or falsely claims to be a victim of identity fraud to evade debt. Account takeover is when someone other than the owner of an account uses the account without permission, indicating that the account has been maliciously compromised.

“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, as in logistics and retail, we are seeing a decline in the rate of such fraud attempts,” said Arellano. 

“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. For example, in the Philippines, the rate of suspected digital fraud attempts originating from it against online communities like dating sites and forums increased by 10% whereas the global average decreased 4%. At times, fraud attempts are conducted at random simply to determine if businesses are prepared to meet their challenges. In this critical time, it pays to be one step ahead,” she said.

TransUnion is a global information and insights company that makes trust possible in the modern economy.

Topics: financial transactions , TransUnion Philippines , fraud attempts , Pia Arellano
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