TransUnion Analysis Finds Fraud Costing Businesses Equivalent of Nearly 7% of Revenues

CHICAGO, Oct. 16, 2024 (GLOBE NEWSWIRE) -- A global TransUnion (NYSE: TRU) analysis found that fraud continues to significantly impact businesses and their bottom lines. The newly released H2 2024 Update to the State of Omnichannel Fraud Report, which explores fraud trends in the first half (H1/January 1-June 30, 2024) of this year, also found that the lender risk exposure to synthetic identities for U.S. auto loans, bank credit cards, retail credit cards and unsecured personal loans reached their highest point ever.

Among the key findings in the report were the results of a TransUnion survey of more than 800 business leaders in Canada, India, the U.K. and the U.S. which revealed total fraud losses of 6.5% equivalent of their companies’ revenue. This totaled approximately $359 billion among these business leaders’ organizations, a number which projects out exponentially greater when considering these represent only a small percentage of business leaders. Among those surveyed in the U.S., they said their company lost the equivalent of 6.7% of their revenue due to fraud over the past year, totaling $112 billion.

In addition, 75% of the global survey respondents said that every type of fraud they measured stayed the same or increased year-over-year (YoY). Nearly half of respondents indicated that scam/authorized fraud, wherein a person is tricked into giving up something of value, saw the greatest YoY increase. It was also the most common cause of fraud loss according to global respondents at 31% and US respondents at 35%. In fact, in the U.S., this was more than double the next most common cause of fraud losses – synthetic identity fraud at 17%.

“Protecting customers and their businesses from fraud is essential to enabling safe and tailored consumer experiences. These findings reveal that despite the good-faith efforts that are being undertaken by global organizations to identify and prevent fraud to date, fraudsters continue to evolve and it’s vital that fraud prevention methods keep up with the changing times,” said Steve Yin, global head of fraud at TransUnion. “Business that aren’t already doing so should ensure that they are taking advantage of fraud prevention technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection as critical components of their fraud prevention programs.”

According to proprietary insights from TransUnion’s global intelligence network, the global rate of suspected Digital Fraud remained stubbornly high in H1 2024 at 5.2% of all transactions. For transactions where the consumer was located in the U.S., 4.6% of digital transactions were suspected to be fraudulent over the period. Breaking it down by the industry, the highest rate of suspected Digital Fraud for transactions where the consumers were in the U.S. was the gaming sector, for which 13.3% of all transactions in that industry were suspected to be fraudulent in H1 2024.

Synthetic Identity Lending Exposure Reaches New Record High

Potentially driven in part by the wealth of stolen identities acquired via data breaches, accounts opened using synthetic identities continue to put lenders at risk. In fact, the increases among overall lender exposure to synthetic identities for US auto loans, bank credit cards, retail credit cards and unsecured personal loans continued in H1 2024. TransUnion documented such exposure rising from $3.0 billion in H1 2023 to $3.2 billion in H1 2024, an all-time high and growth of 7% YoY. The share of accounts opened for the four tradelines by synthetic identities rose 18% YoY, also reaching an all-time high.

The auto loan industry continued to be the most impacted by lender exposure to synthetic identities among the four tradelines, accounting for $2.0 billion of the total in H1 2024, the fourth consecutive first half of the year in which auto has seen the greatest exposure. In fact, since surpassing bankcards in H1 2021, auto loan exposure is now double that of bankcard, which is currently at $1.0 billion.

“Fraudsters are increasingly using synthetic identities to accumulate balances, particularly targeting the auto industry,” said Yin. “Unfortunately, this warrants attention to as the market is now facing a rising threat of charge-offs.”

Lender Exposure to Synthetic Identities Continues to Trend Upward, Led by Auto

Source: TransUnion TruValidate™ data

The percentage of newly-opened accounts connected to synthetic identities has also seen a steady rise since 2020, and in H1 2024 stood at 0.20% of all accounts associated with the four tradelines in the table above. The tradeline with the highest percentage in H1 2024 was bank card, which was at 0.33% for the period, followed closely by auto loans at 0.27%.

Industry Perspective: Online Forums and Dating Sites Most Impacted by Digital Fraud in H1 2024

In H1 2024, the communities industry – which includes web properties like online forums and dating sites – experienced the largest percentage (11.5%) of suspected Digital Fraud globally. This represents a 23% increase over H1 2023. TransUnion’s communities customers reported profile misrepresentation as the most frequent type of fraud they witnessed in H1 2024. Not surprisingly, the communities industry had the highest suspected Digital Fraud rate in seven of the 19 countries and regions analyzed in H1 2024.

In terms of global volume, synthetic identity fraud was the fastest-growing Digital Fraud type across industries from H2 2023 to H1 2024, increasing by 153%. Electronic fund transfers fraud saw the highest YoY growth, up 113% from H1 2023 to H1 2024. However, promotion abuse, which is defined as consumers or fraudsters taking advantage of marketing offers to receive unintended financial incentives, was the most common Digital Fraud type globally in H1 2024, with 3.6% of Digital Fraud reported to TransUnion by its customers.

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 efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) determined to be fraudulent upon customer investigation, or 4) determined to be a corporate policy violation upon customer investigation —compared to all transactions it assessed for fraud. 

Download the TransUnion H2 2024 Update to the State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report include the United States, 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 and Zambia.

For more information and insights about the global fraud trends, please download the report. Consumers who believe they may be a victim of fraud can find resources and information here.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.
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