As more and more people are adopting online and digital transactions, online frauds are keeping pace. A recent survey by international company TransUnion reveals that in the four-month period between January and April 2021 online digital financial fraud attempts originating from India rose by almost 90% compared with the previous four months September to December 2020.
Globally the situation is worse. Financial frauds increased by as much as 150%.
The TransUnion survey reveals that financial frauds are leading the chart of frauds whether in India or across the world.
The overall percentage of fraud attempts originating from India against any type of businesses increased by 25% during the same time period and globally it increased by around 24%.
The study defines true identity theft as the most prevalent type of digital fraud globally in financial services. The fraudster uses a stolen identity to commit an electronic theft.
According to the study, after financial frauds, telecommunication and travel and leisure-related frauds occupy distant second and third places. The rise of frauds in these two sectors were recorded at 18.54% and 11.57% respectively.
Globally, there was a 0.7% rise in the number of frauds related to telecom, while those related to travel and leisure went up by 25% during January-April window.
While most of the frauds centre around creating fake identity and credits cards, the second and third most reported type of digital fraud are first party application fraud and account takeover.
On the other hand, the sectors where frauds declined during this period are online gaming, logistic and retail sector. In the online gaming domain, fraud related to gold farming, fake shipping and fake promotional offers dominate. The rate of growth in frauds in these three areas were (-)34%, (-)13.17% and 4.2% respectively.
Gold farming is the practice of playing a multiplayer game where a large number of players are involved to acquire in-game currency that is then sold in the real world for money.
Fake shipping targets the domain of logistics where money is extracted with the fraudulent promise of dispatching goods.
The world has witnessed almost the same trend except the gaming sector. Fraudulent activities increased by 9.25%. But logistic and retail sectors witnessed a dip by (-)32.75% and (-)8.33% respectively.
“The key takeaway from the study is that apart from financial services fraudsters do not treat the rest of the 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.” said Shaleen Srivastava, executive vice-president, TransUnion India.
TransUnion came to the conclusions about fraud against businesses based on intelligence from billions of transactions and more than 40,000 global websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite.
These websites and apps have traffic coming from countries across the globe, including India.
“The rate of digital fraud attempts is up globally and especially in the financial services industry because fraudsters understand this is where the most high value transactions are taking place,” said Srivastava, EVP and Head of fraud solutions, TransUnion India.
“This study reveals that fraudsters are everywhere and they prefer any type of financial services over everything else. So, governments and the fin-tech companies should be more vigilant in protecting consumer interest,” said Bivas Chatterjee, cyber fraud expert.
“We are seeing more financial services organisations implement fraud prevention solutions with some success, though our findings make it clear that this is not the time to relax,” Srivastava added.
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