Financial services hit by suspected digital fraud

Suspected digital fraud attempts in Botswana increased sharply in the nancial services and online gaming sectors, according to a newly- released study by TransUnion.

TransUnion, a global information and insights company with over 13 000 associates operating in more than 30 countries including Botswana, Kenya, Malawi, Namibia, Rwanda, South Africa, eSwatini, and Zambia - reports that the sector had the highest suspected digital fraud rate and year- over- year rate growth among industries analysed in 2023.

While TransUnion admits that some industries were excluded due to a lack of statistically signi cant data, the rate of suspected digital fraud attempts for nancial services transactions where the consumer was in Botswana when transacting, increased by 196 percent year- over- year to 9.7 percent in 2023. is was both the highest suspected digital fraud rate in 2023 and YoY rate growth among industries of statistical signi cance. e TransUnion 2024 State of Omnichannel Fraud Report also found that across industries in 2023, 3.0 percent of all transactions where the consumer was in Botswana were agged as being suspected digital fraud – an 85 percent YoY increase. Further, that nearly one in seven newlycreated accounts are suspected to be created via digital fraud globally in 2023, largely driven by bad actors using fabricated or stolen identities. e report suggests that this may indicate a shi in the tactics deployed by fraudsters hoping to engage earlier in the transactional process.

Examples of the types of transactions that take place during the account creation process include account signup, registration and loan origination. Among the industries globally that saw the highest percentage of digital account creation transactions suspected to be digital fraud globally in 2023 were retail it was at 44.7 percent, travel and leisure 36.0 percent, and video gaming 31.5percent.

“is early- phase new account digital fraud may represent a paradigm shi of sorts among fraudsters globally,” Chief Executive O cer at TransUnion Botswana, Kabelo Ramaselwana said.

“In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, they are increasingly choosing to create new accounts that they can control themselves. ese fraudsters leverage synthetic identities assembled in large part through the use of credentials gathered as a result of one or multiple data breaches,” he said. In contrast, for transactions where the consumer was in Botswana, the highest percentage of suspected Digital Fraud in the online customer journey occurred at account login, at 13.0 percent, varying widely by industry. e study also found that ve percent of all global digital transactions were suspected to be digital fraud in 2023, with the volume of risky transactions up 14 percent YoY and 105 percent from 2019 to 2023. is growth continues to outpace the growth in digital transactions, which rose 90 percent from 2019 to 2023. Globally, retail surpassed gaming as the industry seeing the highest rate of suspected digital fraud in 2023 at 8.7 percent, up 21 percent YoY. In addition, the telecommunications industry saw a 111 percent YoY increase in the suspected digital fraud rate, up to 4.5 percent. “In recent years, the global retail industry has consistently been among those with the highest suspected fraud attempt rates. However, in 2023 it climbed to the top of the list,” said Ramaselwana.

As a result of credentials stolen in data breaches, o en in industries other than retail, it has become increasingly easy for fraudsters to perpetuate attacks that leave retailers vulnerable to account takeover.

TransUnion came to its conclusions about digital fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers e cient consumer experiences called the TransUnion TruValidate. e rate or percentage of suspected digital fraud attempts re ect those that TransUnion customers determined met one of the following conditions: denial in real time due to fraudulent indicators, denial in real time for corporate policy violations, fraudulent upon customer investigation, or a corporate policy violation upon customer investigation — compared to all transactions assessed. e report’s ndings are based on proprietary insights from TransUnion’s global intelligence network, and includes data from Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States, and Zambia.