SOME 8.3% of all digital transactions by consumers in the Philippines last year were suspected to be fraudulent, 66% higher than the global digital fraud rate of 5%, based on a study by TransUnion.
TransUnion’s 2024 State of Omnichannel Fraud report showed that for transactions where the consumer or fraudster was located in the Philippines, retail saw the highest suspected digital fraud rate at 11.8%, it said in a statement.
This was followed by financial services (10%), communities such as online dating and forums (5.2%), logistics (4.4%), public sector (3.9%), travel & leisure (3.2%), and telecommunications (2.4%).
Still, the retail sector saw an 18% decrease in the digital fraud rate from 2022.
Suspected digital fraud attempts in logistics, telecommunications, and travel and leisure also went down by 54%, 44%, and 2%, respectively.
“Financial services tallied the greatest increase in the suspected digital fraud rate, up 41% in 2023 from 7.1% in 2022. While the total number of financial services digital transactions when the consumer was in the Philippines was 51% higher in 2023 compared to the previous year, the volume of suspected digital fraud in this industry significantly outpaced this growth, with a surge of 113% from 2022 to 2023,” TransUnion added.
The digital fraud rates for communities and the public sector also went up by 9% and 4% year on year, respectively.
“While the global retail industry has consistently been among those with the highest suspected digital fraud attempt rates in recent years, we saw it placed at the top of the list both locally and globally in 2023. More concerning is the situation in the Philippines, where the suspected digital fraud rate across various industries exceeds global averages, except for telecommunications,” TransUnion Philippines Chief Commercial Officer Yogesh Daware said in a statement.
“As a result of credentials stolen in data breaches, it has become increasingly easy for fraudsters to perpetuate attacks that leave consumers vulnerable to account takeover at an earlier stage in the customer journey. In response to this, it is crucial for organizations across industries to take proactive measures to enhance their protection throughout the entire customer lifecycle. This entails strengthening capabilities at every touchpoint to ensure comprehensive protection for both businesses and consumers,” he added.
The study found that fraudsters were shifting tactics and engaging with potential victims at an earlier stage in their consumer journey, with 13.3% of Philippine-based transactions associated with account logins suspected to be digital fraud last year.
The second-highest percentage of suspected digital fraud in the customer journey was in account creation at 3.2%.
TransUnion said local occurrences of digital fraud attempts in the earlier stages of account logins and creation were significantly higher compared to the final transaction stage, which was at 1.2%. The latter stages usually involve activities such as purchases, withdrawals, and deposits.
“This rise in suspected digital fraud in the account login and creation stages of the consumer journey may represent a paradigm shift of sorts among fraudsters,” Mr. Daware said.
“Alongside traditional tactics to gain access to and ultimately compromise existing accounts, fraudsters are also increasingly choosing to create new accounts that they can control themselves. As data breaches continue to pose a threat to sensitive or confidential information across various industries in the Philippines, fraudsters could possibly leverage synthetic identities assembled in large part using credentials gathered from such incidents,” he added.
The study also found phishing was the most reported fraud scheme in the Philippines, with 57% of respondents saying they were targeted but did not fall victim to these, while 11% said they were victimized and 33% said they were not targeted.
TransUnion conducted an online survey of 13,923 adults aged 18 years or older from Dec. 5-23, 2023 in 18 countries. — A.M.C. Sy
Philippines’ 2023 suspected digital fraud rate higher than global level, study shows
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