Fraudsters are evolving. What can we do to stay ahead?

Fraudsters are evolving. What can we do to stay ahead?

In today’s digital world, fraud prevention is more important than ever.

Fraud prevention strategies for businesses aren’t merely checkboxes to meet consumer or regulatory expectations; they are cornerstones for sustainable business success.

Having measures in place to prevent digital fraud enables greater trust between businesses and consumers, particularly among Filipinos who are now growing comfortable with transacting online.

However, as technology continues to evolve and consumer behavior continues to change, fraudsters will diversify their tactics to target unprepared businesses and unsuspecting consumers.

Fraudsters are striking earlier in the consumer journey

According to TransUnion’s 2024 State of Omnichannel Fraud Report, 8.3 percent of all digital transactions in 2023 where the consumer was in the Philippines were suspected digital fraud. This figure is 66 percent higher than the global suspected digital fraud rate of 5 percent over the same period.

Moreover, the report also revealed that changes in fraudster schemes are indeed occurring.

Aside from going after consumers in the transaction stage of the customer journey, more fraudsters have chosen to strike at an even earlier phase.

In 2023, for digital transactions where the consumer was based in the Philippines, the report further indicated that 13.3 percent of transactions associated with account logins were suspected to be digital fraud.

The second highest percentage of suspected digital fraud in the customer journey, still for transactions where the consumer was in the Philippines , was account creation at 3.2 percent.

With many businesses and e-commerce platforms aiming to grow their customers by making the account creation process as streamlined as possible, this creates opportunities for fraudsters to capitalize on any vulnerabilities and oversights.

Fraud at the account creation stage can take on many forms. To go through an account registration flow, fraudsters can either use the details of real people, such as names and email addresses, or they can create false identities using a combination of fabricated and verifiable information.

The occurrence of suspected digital fraud at the initial stages of account login and creation is significantly higher compared to the final financial transaction stage, which had a rate of 1.2 percent for transactions where the consumer was located in the Philippines. This stage usually involves activities, such as purchases, withdrawals and deposits, which typically occur toward the end of a customer’s journey.

Either way, these schemes pose serious threats to consumers and businesses. Individuals risk falling victim to identity theft and incurring financial losses, while companies can lose customers and damage their reputations.

Protecting information to foster greater trust

The rise in both account login and account creation fraud in the country is not an isolated case.

Both forms of fraud utilize stolen information obtained from data breaches or social engineering scams, such as phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) or smishing (fraudulent text messages meant to trick you into revealing data), that exploit a person’s trust to obtain money or information.

In an age where information is currency, I believe the ways to safeguard information must continue to advance as well.

At TransUnion, information is at the core of our business. We uncover stories, trends, and insights behind data to not only help businesses manage risk, but also for consumers to protect and manage their credit, personal information, and identity.

By working together, we can build a safer online ecosystem for businesses and consumers —building better trust in digital systems as the world continues its march toward further digitalization. —CONTRIBUTED INQ

The author is chief commercial officer of TransUnion Philippines, the local office of Chicago-based TransUnion, a global information and insights company with over 13,000 associates operating in more than 30 countries, including the Philippines.