TransUnion Studies: Fraudsters Focused on Travelers, Gaming; and COVID-19 Schemes


Source: TransUnion

By Roy Urrico


Finopotamus aims to highlight white papers, surveys, analyses and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.


Scammers shifted focus in mid-2021 from financial services to travel and leisure, and other industries; and more than a third of consumers suffered COVID-19 related digital fraud. Those are findings in two separate studies from Chicago-based information and insights company TransUnion.


For its quarterly analysis, TransUnion monitors digital fraud attempts reported by businesses in varied industries, such as financial services, gambling, gaming, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite: TransUnion TruValidate.

Shai Cohen. TransUnion

“It is quite common for fraudsters to shift their focus every few months from one industry to another,” said Shai Cohen, senior vice president of Global Fraud Solutions at TransUnion. “Fraudsters tend to seek out industries that may be seeing an immense growth in transactions. This quarter, as countries began to open up more from their COVID-19 lockdowns and travel and other leisure activities became more mainstream, fraudsters clearly made this industry a top target. The immense growth in gaming fraud also can be attributed to the shifts in focus of fraudsters as this growing market becomes a larger target.”


The sudden shift in focus of fraudsters impacts financial services in a way. Global financial services online fraud attempt rose 149% compared to the first four months of 2021 and the last four months of 2020. However, when comparing the second quarter of 2021 with the second quarter of 2020, the rate of suspected online financial services fraud attempts still climbed, but at a much lower rate of 18.8% globally and 38.3% in the U.S.


Across industries, the rate of suspected digital fraud attempts rose 16.5% globally when comparing the second quarter 2021 with the same quarter of 2020. In the U.S., the percentage of digital fraud attempts increased at a similar rate (17.1%) during the same time period. Gaming and travel and leisure were the two most impacted industries globally for the suspected digital fraud attempt rate, rising 393 and 155.9% in the last year, respectively. In the U.S., this rate rose 261.9% for gaming and 136.6% for travel and leisure.


Fraudsters are also quickly adapting to target desperate travelers. Recently, the U.S. State Department temporarily shut down its online booking system for all urgent passport appointments in response to a group of scammers using bots to book all available appointments and sell them for as high as $3,000 to applicants with urgent travel needs.

Melissa Gaddis, TransUnion

“We are seeing because of the reopening of the economy, people have more disposable income,” said Melissa Gaddis, senior director of customer success, Global Fraud Solutions at TransUnion. “We are seeing significantly more traffic in some of those industries where you'd need disposable income, specifically the travel and leisure and the gaming industries. And because we are seeing so much more transactions there's of course, opportunities for fraudsters.”


It does not mean financial institutions are off the hook, they are just not the only mark. Targeting credit unions and banks is always a lucrative business for fraudsters because of what they can do with the Personally identifiable information (PII), noted Gaddis. Even though fraudsters now also target the gaming and travel industries, the primary fraud perpetuated is credit card fraud, which still falls back on financial institutions.


More than One of Three Become Pandemic Targets


TransUnion’s quarterly Consumer Pulse survey in June 2021 explored the impact of the COVID-19 pandemic on consumers’ personal finances. TransUnion’s found that approximately 36% of global survey respondents said fraudsters targeted them in COVID-19 related digital schemes during this year’s second quarter. Fraudsters targeted 39% of U.S. respondents.


Gaddis pointed out, “We're doing this (study) specifically because of (COVID-19) and the impact that the pandemic has had on the digital world and all the digital transactions, both from a, fraud perspective, but also all the businesses that had to shift.”


For the second quarter of 2021, the study discovered phishing was the No. 1 type of COVID-19 related digital fraud impacting global consumers. Stolen credit card or fraudulent charges were the second most cited COVID-19-related online fraud among those targeted, affecting global consumers at a 24% rate. Phishing was also first in the U.S. at 35% followed by stolen credit card or fraudulent charges at 31%.


“One in three people globally have been targeted by or fallen victim to digital fraud during the pandemic, placing even more pressure on businesses to ensure their customers are confident in transacting with them,” said Gaddis. “As fraudsters continue to target consumers, it’s incumbent on businesses to do all that they can to ensure their customers have an appropriate level of security to trust their transaction is safe all while having a friction-right experience to avoid shopping cart abandonment.”


The Consumer Pulse survey also measured changing consumer attitudes and behavior based on the dynamics of income, debt and identity theft. Highlights reveal that:


· The U.S. appears to be at a crossroads on the COVID-19 road to recovery. Fewer consumers (32%) report having income currently negatively impacted by the pandemic, a 16% improvement from the first quarter of this year. For consumers who reported reduced income during the pandemic, household finances have not improved, and in some instances, worsened since the first quarter.

· Recent graduates are more likely to find alternative income through gig work (21% compared to 9% overall population), selling goods informally (17% vs. 8%) and starting a small business (18% vs. 6%).

· Households with children are seeing improved income. However, 43% reported having their income currently reduced compared to 26% of those who do not have children. Nearly three-quarters of consumers with children (73%) said they are optimistic about the future compared to 58% without children.

· Consumers who are or plan to get fully vaccinated are optimistic and will increase spending. Two-thirds (67%) of fully vaccinated consumers and 71% of those who plan to get fully vaccinated are optimistic in comparison to 52% of those who do not plan to get fully vaccinated.


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