Companies Must Adapt During Social Distancing as Transactions Move Online and Fraud Does Too
TransUnion Africa has released new research that shows digital fraud is rising globally as consumers and businesses increasingly transact online during the COVID-19 pandemic. The company recommends businesses adapt swiftly to protect their customers while continuing to provide appropriate levels of customer experience.
According to the latest research from global information and insights company TransUnion, the percentage of suspected fraudulent digital transactions rose 5% over the period of March 11-April 28 when compared to Jan. 1-March 10. TransUnion identified more than 100 million suspected fraudulent transactions from March 11-April 28. It used March 11, 2020—the date the World Health Organization (WHO) declared the coronavirus (COVID-19) a global pandemic—as a base date for its analysis.
Speaking at the webinar launch of its COVID-19 digital and fraud playbook this week, TransUnion Africa
Chief Product Officer Tim Collins said while the need for digital channels had increased exponentially, fraud has also evolved and become more sophisticated.
“Recent experience suggests we will see fraud rise sharply in the coming months and years. We saw a 40% increase in cybercriminal activity during the two years following the Great Recession’s 2009 peak*, for example,” said Collins.
The playbook is an insights-driven methodology designed to help South African businesses navigate an increasingly online world, and includes three different scenarios on how fraud could increase in the coming months: best-case, in which digital fraud increases by at least 40%; mid-case, in which fraud increases by between 40-80%; and worst-case, in which fraud increases by 80% or more.
TransUnion recently analysed industries for a change in the percent of suspected digital fraud against them, comparing the periods of Jan. 1-March 10 and March 11-April 28. It found that globally the telecommunications (76%increase), e-commerce (12%) and financial services (11%) industries have been increasingly targeted between the two periods analysed. “Our data shows that as social distancing changes shopping patterns, fraudsters have taken notice and targeted the more digital forward industries while following the money,” said Collins.
Speaking at the webinar, TransUnion Africa Product Director Keith Wardell said many companies are battling to balance the need for protecting themselves and their customers from fraud with providing a seamless customer experience. While consumers have heightened expectations of the user experience on digital channels, current fraud detection and prevention methods often impact that experience.
According to a 2018 study on Fraud Detection And ID Verification In Financial Services, conducted by Forrester Consulting on behalf of TransUnion, more than half (54%) of financial services firms see their identity verification methods as burdensome on good customers. This leads to a significant impact from customers abandoning new applications before completion due to current fraud detection and mitigation processes.
“It’s about making sure consumers and organisations can transact with confidence. South African businesses need a multi-layered approach to manage ever-evolving fraud threats: there is no single ‘silver bullet.’ This approach includes robust identity verification including biometric and device authentication as well as other tools for assessing fraud risk and meeting regulatory obligations. You need to know exactly who you are dealing with, and provide genuine customers with a seamless experience,” said Wardell.
Businesses and financial institutions interested in learning more about the COVID-19 digital and fraud playbook can find links to the launch webinar and further contact information, click here.
*Regulatory DataCorp: Technology, Cybercrime, and Recessions: An Untimely Trio, observed a 40% increase in cybercriminal activity during the two years following the Great Recession’s 2009 peak.