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Fraud is an unintended consequence of our increasingly digital world. With the steep rise in digital transactions after COVID-19 hit, we’ve also seen the prevalence of digital fraud attempts on businesses and consumers alike. Fraudsters simply tend to shift their focus every once in a while, seeking out industries that may be seeing immense growth in transactions.
In our newest quarterly analysis, we found that the rate of suspected digital fraud attempts rose 16.5% globally across industries when comparing Q2 2021 to Q2 2020. Gaming, and travel and leisure were the two most impacted industries globally, rising 393.0% and 155.9% in the last year, respectively. In the Philippines, this rate rose 51.38% for gaming and 198.50% for travel and leisure.
The pandemic was a driver for both these trends. In the second quarter, countries began to open up more from their lockdowns, pushing travel and other leisure activities to the mainstream, which in turn made it a top target for fraudsters. Gaming, meanwhile, enjoyed a spike in user engagement and spending in the past year as a popular activity while observing social distancing.
Indeed, history has shown that fraudsters exploit major crisis events to carry out their schemes, reveling in people’s vulnerability when it is most chaotic. These days, COVID-19-related digital fraud attempts abound enough that approximately 48% of Philippine respondents in our latest Consumer Pulse study reported they were targeted. Phishing is the top type of such fraud, impacting 40% of Philippine consumers who stated they were targeted, followed by third-party seller scams on legitimate online retail websites at 29%.
Like the virus plaguing the world today, fraud is damaging our financial systems and hampering what should have been our progress at economic recovery. Yet, as technology provided us a lifeline in isolation, technology is also helping us through this ordeal. Businesses must invest in fraud prevention technologies as they are critical in making trust possible between businesses and consumers, effectively empowering them to transact with confidence in the digital world.
We have a holistic fraud solution in the Philippines that can link TransUnion data, personal data, device identifiers, and online behaviors from billions of confirmed devices and transactions. This technology can identify devices with evasive behaviors, risky attributes, or a history of fraud as soon as they connect with a site or app and can react quickly to changing fraud patterns.
Fraudsters can no longer hide behind anonymity on the internet as advanced insights and our global network of confirmed fraud reports enable proactive businesses to discover their vulnerabilities and manage risk. When employed correctly and at the right time, it can even help prevent cross-border fraud.
Key to fraud prevention is identity proofing
The cost of fraud goes beyond financial losses; oftentimes, the reputational damage it comes with takes longer and is harder to recover. To avoid this altogether, reinforcing fraud prevention strategies with identity proofing technologies can help stop fraud in its tracks.
Identity proofing technologies essentially work by comparing consumer-provided information — for instance, during onboarding — against a database of personal and digital data. This helps businesses ensure the integrity of submitted IDs and, in the case of existing accounts, be able to verify whether attempted logins are by the rightful owner, ultimately enabling businesses to discern genuine users to engage from fraudsters to evade.
With the rising demand for digital services in almost every industry, businesses have to keep up to thrive and grow. Along with providing a seamless onboarding experience that creates a positive impression from the start and builds customer trust, businesses are expected to outsmart fraudsters and their ever-evolving schemes.
Remember that customers extend their trust every single time they click “Confirm”. As digital transactions are carried out 24/7, what stakeholders decide to do about the threat of fraud will ultimately spell the difference between success and failure in the digital transformation journey.
Pia Arellano is a seasoned financial services leader with over 25 years of industry experience across banking, payment solutions, telecommunications, and remittance services. She is instrumental in establishing TransUnion as a risk management and data solutions and insights partner of financial institutions in the Philippines.
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