Digital fraud attempts more than doubled in the US from 2019 to 2022, according to a report from TransUnion.
The firm’s 2023 “State of Omnichannel Fraud Report” found that a pivot to increasingly digital transactions since the beginning of the COVID-19 pandemic has significantly increased digital fraud risk for individuals and organizations.
The report found that 4.6% of digital transactions globally were suspected to be fraudulent in 2022. That’s in line with the 2019 pre-pandemic figure, but there’s a key difference: volume.
The sheer number of digital transactions has led to global fraud attempts jumping 80% from 2019 to 2022 and US fraud attempts increasing 122%.
There’s more than one way to defraud a cat
Globally, the gaming and retail sectors saw the highest rates of suspected digital fraud, at 7.5% and 7.2%, respectively. Video gaming (5.4%), financial services (4.2%) and online communities (4%) were next.
The biggest growth compared to pre-pandemic, perhaps as many flocked to take trips again, was travel and leisure. That industry saw a 117% increase in digital fraud globally.
In terms of methods, a TransUnion survey found that 52% of respondents said that they were targeted by fraud via email, online, phone call, or text messaging in the fourth quarter of 2022.
The firm also determined that Voice over Internet Protocol (VoIP) is a huge source of potential fraud for the financial services sector. Mobile phone calls made up 85% of calls to US financial services center customers but just 14% of “high-risk” calls. Instead, 62% of all high-risk calls into the call center came VoIP calls, which aren’t associated with a physical address.
“The explosion of digital transactions, the accelerated adoption of digital technologies, and increasing appetite for faster access to funds/credit, have led to an increase in fraud losses, particularly in digital channels,” said Naureen Ali, vice president of product management at TransUnion. “Consumers are expecting organizations to protect their identities and online accounts, and those companies that do not adequately honor those preferences may lose business as a result.”
Then there’s the matter of data breaches. The number of breaches in the US increased by 83% from 2020 to 2022, and their severity increased as well, according to the report.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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