8.7 percent of digital transactions in the Philippines in 2022 were suspected to be fraudulent, the third highest among all countries and regions studied.
Volume-wise, the digital fraud attempts originating from the country decreased by 18 percent compared to pre-pandemic 2019.
Digital fraud attempts in PH decline 18% -- report
At a glance
Digital fraud attempts in the Philippines fell significantly in 2022 in terms of volume, despite the rise in digital fraud globally, according to the latest study released by TransUnion, a global information and insights company.
TransUnion’s new 2023 State of Omnichannel Fraud Report released Friday, March 31, showed that 4.6 percent of global digital transactions analyzed in 2022 were potentially fraudulent, a steady rate seen in 2019. Despite the easing of fraudulent attempts, the volume of global digital fraud attempts increased considerably by 80 percent from 2019 to 2022, alongside a marked increase in global digital transactions.
In the Philippines, 8.7 percent of digital transactions in 2022 were suspected to be fraudulent, the third highest among all countries and regions studied. However, when looking at the volume, the digital fraud attempts originating from the country decreased by 18 percent compared to pre-pandemic 2019.
“Despite the return to the pre-pandemic levels, the Philippines’ digital fraud rate still stands at a much higher level than the global average, leaving no room for complacency,” said Amrita Mitra, chief operating officer at TransUnion Philippines. “As fraudsters become increasingly sophisticated, businesses must continue to equip themselves with the proper tools to detect fraud at the first warning sign without inhibiting the consumer journey.”
The report further noted that logistics tops the list of industries targeted by digital fraud in the Philippines. For transactions originating from the Philippines, the report stated that logistics industry saw a significant increase in suspected digital fraud, where it increased by 133 percent since 2019. The gaming and communities (online dating and forums) industries also experienced notable growth in digital fraud attempts, up 30 percent and 15 percent, respectively, over the same period.
The study found that a large percentage of people are being impacted by digital fraud attempts across a wide range of communications channels. In a TransUnion-commissioned consumer survey across 18 countries and regions globally, 52 percent of respondents indicated that they were targeted by digital fraud via email, online, phone call, or text messaging in the three months beginning September 2022.
Majority of Filipinos also encountered digital fraud attempts across a wide range of communications channels.
Among Filipinos surveyed, 71 percent said they were targeted by digital fraud attempts across these communications channels, and 11 percent among all surveyed actually fell victim over this time period.
Phishing (fraudulent emails, social posts, websites and QR codes) and smishing (fraudulent mobile text messages), both at 46 percent, were the most commonly reported fraud schemes experienced by Filipinos, followed by third-party seller scams at 33 percent and identity theft at 25 percent, the study said.
Globally in 2022, the gaming and retail industries saw the highest rate of suspected digital fraud at 7.5 percent and 7.2 percent, respectively. These were followed by video gaming at 5.4 percent, financial services at 4.2 percent and communities (i.e. online dating and forums) at 4 percent.
However, the highest rate of growth globally since 2019 was observed in the travel & leisure industry. This sector saw a 117 percent increase in suspected digital fraud globally as more and more consumers looked to resume traveling following the pandemic period.
Additional findings also showed that consumers expect businesses to protect their identities and online accounts. Globally, 63 percent of respondents indicated they want to be explicitly authenticated to access their online accounts. Most (70%) preferred to be authenticated once at the start of their online sessions. A clear majority (78%) said they prefer having multifactor authentication turned on all the time.
Similar observations were seen among Filipinos, with almost three quarters (72%) saying that they want to be explicitly authenticated to access their online accounts. Of those surveyed, 65% preferred to be authenticated once at the beginning of an online service, and a significant 84% preferred having multifactor authentication turned on at all times.
“Clearly, consumers want secure digital platforms where they can transact with confidence. That said, while they understand that protection entails authenticating themselves, they want a fast and convenient online experience. Businesses must recognize these consumer preferences and employ a strategy of continuous innovation through better data, analytics and technology to more accurately detect possible fraud, while at the same time delivering a friction-right digital experience for consumers,” said Mitra.