Travel and leisure saw the largest increase among digital fraud industry categories in the Philippines with shipping fraud is now the fastest growing common fraud types worldwide boosted by continuous growth in e-commerce, according to a new study.
The TransUnion’s (NYSE: TRU) 2022 Global Digital Fraud Trends Report showed that shipping fraud increased 780.5 percent worldwide in 2021. When compared to a two-year timeframe from 2019 to 2021, TransUnion data showed shipping fraud grew more than 1,500 percent.
The study defined shipping fraud is defined as when a buyer spoofs a shipping address or when a seller receives payment for goods or services, but never ships to the buyer – has quickly emerged as one of the top fraud types across a variety of industries. This issue, however, was most prominent in the logistics industry where consumers purchase goods online and are then reliant on third-party carriers for transportation and delivery of items.
While shipping fraud type spans a plethora of industries, certain business sectors tend to be more prone to digital fraud attempts, the study said.
For transactions originating from the Philippines, the study revealed that travel and leisure industry saw the largest percentage of annual fraud growth in 2021, with an increase of 69.1 percent year on year (YoY) putting the country on similar global pace at 68.4 percent. Communities, including online dating, forums, etc. grew 18.2 percent, and gaming 11.6 percent were the second and third industries with the largest growth in the rate of suspected digital fraud attempts.
The report also revealed that the top three fraud concerns for consumers in the Philippines are identity theft (70%) phishing (64%), and credit card fraud (58%).
Aside from travel and leisure, higher growth in frauds was also reported for communities such as online dating and forum at 18.2 percent in the Philippines as against a negative 9.8 percent growth globally. Gaming fraud in the Philippines also increased by 11.6 versus 32.6 percent globally and gambling fraud inched up 2.3 percent globally, a lot lower than the 19.2 percent growth globally.
Confidence that personal data will be not be compromised ranked as the number one concern at 91 percent among safety and security features that consumers are worried about when transacting online in the Philippines. Also 84 percent of consumers surveyed would like to see easy payment process in the country.
Aside from shipping fraud, other industries reported surges in fraud such as business identity theft rank second highest growth at 113.8 percent in 2021 followed by identity mining/phising at 104.8 percent, first party fraud at 55.8 percent increase, scammer/solicitation up by 53.9 percent, true identity theft at 26.4 percent, application fraud at 19.3 percent, and account takeover at 6.4 percent.
Globally, financial services, and travel and leisure ranked as the top two industries with the largest growth in the rate of suspected digital fraud attempts during the same period. This became especially prevalent as economies normalized from the height of the pandemic and tourism resumed. Digital fraud in the travel and leisure sector saw the greatest YoY increase and grew 68.4 percent with credit card fraud as the predominant type – which is where a customer uses a fake or stolen credit card for a purchase, resulting in a chargeback to the site.
Digital fraud in financial services remained a prime target for fraudulent activity worldwide and grew 33.5 percent YoY, making it an increasing area of concern for businesses and consumers alike. The number one fraud type in financial services is true identity fraud – where the victim is a real person, and a fraudster uses a stolen identity to commit fraudulent transactions. As such, many financial institutions have taken steps to put greater security measures and authentication solutions in place, especially since digital banking is regarded as the industry standard.
“While advances in digital banking and e-wallet services in the country have enabled more Filipinos to formally participate in the financial system, our findings point out that fraudsters have shadowed the shifts in consumer behavior in attempts to take advantage of the disruption,” said Pia Arellano, president and CEO of TransUnion Philippines.
“As consumers value both a seamless user experience as well as security, it is imperative that businesses view fraud solutions not only as defensive measures, but also as instruments in aiding customer acquisition and retention. This approach helps improve the onboarding experience and facilitates a bedrock of trust between businesses and consumers,” she added.