The financial services industry has seen digital fraud attempts increase in 2021 compared to last year as more consumers go online for banking and other financial transactions, according to new research from TransUnion.
TransUnion found that U.S. financial services fraud attempts increased 109 percent when comparing the last four months of 2020 and the first four months of 2021. The company’s research was based on activity in its identity and fraud analytics platform. Globally, suspected digital fraud attempts in the financial services industry increased by 149 percent in the first four months of 2021.
“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, senior vice president of global fraud solutions at TransUnion, said in a statement.
In addition to financial services, TransUnion also monitors digital fraud attempts in several industries, including gambling, gaming, healthcare, insurance, retail and telecommunications.
Across all industries, the rate of suspected digital fraud attempts rose 25 percent in the U.S. and 24 percent globally in the first four months of 2021.
A previous study commissioned by TransUnion showed that COVID-19 had accelerated a shift to digital financial transactions. That study, conducted in late September, showed that 40 percent of respondents with a financial account said they have used digital platforms more frequently since the onset of the pandemic. The survey also found that 60 percent of respondents said that they have conducted the majority of their financial transactions using mobile apps.
“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,” Cohen said. “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.”
TransUnion said the leading type of digital fraud in the financial services industry was identity theft fraud, where a consumer uses a stolen identity to commit fraud. Other types of fraud were first-party application fraud, where a consumer refuses to repay legitimate debts or falsely claims to be a victim of identity fraud to avoid debt, and account takeover, where someone other than the account owner uses the account without permission.
“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 for TransUnion’s global fraud solutions said in the statement. “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.”