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TransUnion research shows digital fraud attempts against companies declining as UK businesses re-open

02 September 2020

INFORMATION AND insights provider TransUnion’s latest quarterly analysis of global online fraud trends finds that fraudsters are decreasing their schemes against businesses, but increasing COVID-19 scams against consumers online.

TransUnion came to its conclusions about fraud against businesses based on intelligence from billions of transactions for more than 40,000 websites and apps contained in its fraud prevention solutions. It found the percentage of suspected fraudulent digital transactions against businesses worldwide decreased by 9% from the beginning of the pandemic (ie Phase One 11 March-18 May) to when businesses began re-opening (ie Phase Two 19 May-25 July).

In contrast, TransUnion’s Consumer Financial Hardship Study finds that, globally, the number of consumers targeted by digital COVID-19 fraud schemes increased by 10% from early in the pandemic (ie the week of 13 April) to more recently (ie the week of 27 July).

In the UK, TransUnion’s findings align with the global analysis. Suspected risky transactions as a percentage of all transactions originating from the UK against businesses decreased by 22% when comparing pre-pandemic (1 January-10 March) to Phase Two, after an initial increase of 12% when comparing Phase One to the pre-pandemic perod. Yet the latest data from TransUnion’s study of UK households at the end of July shows that consumers have seen an increase in digital fraud attempts related to COVID-19, with one-in-four people having been targeted since March.

John Cannon, managing director of fraud and ID at TransUnion here in the UK, commented: “Over recent months, businesses have seen the increased adoption and use of digital channels. This can present attractive opportunities for fraudsters. It’s encouraging to see that we’re proportionally stopping more suspected fraud attempts against businesses thanks to robust controls.”

On that note, Cannon added: “However, this will likely result in fraudsters moving to other targets. In particular, consumers are facing increasing fraud threats as our Financial Hardship Study confirms, with COVID-19 digital fraud attempts in the UK increasing from 22% to 27% between March and July. In order to tackle this trend, senior business leaders should continuously review whether or not their current controls are adequate for the changing digital fraud landscape.”

Industries targeted by transactions coming from the UK

TransUnion has analysed how different industries have been impacted by looking for a change in the percentage of suspected online fraud against them originating from the UK. The company compared the periods of 1 January-10 March (pre-COVID-19), 11 March-18 May (Phase One) and 19 May-25 July (Phase Two).

Financial services saw a decrease of 60% when comparing suspected digital fraud pre-COVID-19 to Phase Two, whereas retail saw the biggest increase of 44% at the end of Phase Two when compared to the pre-pandemic period. Telecoms also saw a significant increase in suspected fraud of 24% when comparing the same periods, followed by the insurance sector at 8%.

Travel and leisure initially saw a significant decline in suspected online fraud during Phase One, but that changed in Phase Two, although overall there was still a 12% decrease when comparing the latter with pre-pandemic figures. Gambling saw a similar decrease of 10% in risky transactions when looking at the same timeframe.

Cannon continued: “While suspected fraud attempts might be declining across the board for businesses, certain industries are still facing a significant threat. Like many criminals, fraudsters can be opportunistic, following the industries that are most in demand as the pandemic develops. Retail and telecommunications are both examples of this as our figures demonstrate.”

He went on to observe: “Similarly, the decline in suspected fraud within travel and leisure coincided with the first phase of UK lockdown, but as restrictions have eased, scammers have stepped up their fraudulent activity in this sector. It’s essential that businesses have the right prevention tools in place to help protect consumers, as well as educating them on how to spot the warning signs.”

Cost to consumers

An additional UK survey on COVID-19 scams shows that, by the end of Phase One, fraud related to the pandemic had cost UK consumers £3.6 billion, while the ongoing study would suggest that figure will have continued to rise.

This research, which covered both online and offline fraud, found that one-in-ten UK consumers (12%) had fallen victim to a scam in Phase One, at an average cost of £550. The two most common methods of targeting consumers were via e-mail and over the phone (both 29%), but a surprising number of scams were carried out in person (12%).

The nationwide survey suggested that those aged between 18 and 34 and living in major cities are most likely to fall victim, accounting for two-thirds (66%) of those believing a COVID-19 related scam and losing money as a result. Males are almost twice as likely to be conned with a COVID-19 scam than women (62% versus 37%).