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Rate of suspected digital fraud attempts decrease

Rate of suspected digital fraud attempts decrease

The rate of digital fraud originating from Namibia decreased in the First Quarter (Q1) of 2022, with suspected online fraud attempts declining -7.0% from the same quarter last year. This is in line with the global decrease of -22.6% during that period. TransUnion’s Quarterly digital fraud analysis observed that while the overall rate of suspected digital fraud declined in Namibia, there were significant shifts year-over-year (YoY) with certain industries.

Sectors such as telecommunications, travel, leisure, and retail saw a YoY decrease in the suspected attempted digital fraud rate from Namibia. Conversely, fraudsters in Namibia increased their suspected scams in sectors such as gambling and financial services.

Head of Fraud at TransUnion South Africa, Amritha Reddy said what they have observed in Namibia and globally is that sophisticated fraudsters are shifting their focus to target new industries as sectors perversely targeted have ramped up fraud prevention measures. “In other words, fraudsters are constantly seeking out new opportunities based on vulnerabilities,” added Reddy.

Reddy further said that what is critical is that companies do not become complacent with fraud prevention measures as fraudsters become ever more sophisticated. “At the same time, companies should leverage this temporary shift in fraudulent activity to focus on optimising customer experience without compromising security,” said Reddy.

Reddy indicated that as digital fraud rates stabilise in Namibia during a period when fraudsters are searching for new vulnerabilities, it is important that organizations shift their focus to identifying more good customers and transactions to drive revenue and customer lifetime value. “By reducing false positives, false declines, and manual review rates, organisations can improve their customer experience through trusted connections while still keeping the fraudsters at bay,” emphasised Reddy.

The rate of digital fraud attempts decrease in Namibia, but some industries see growth

The telecommunications industry saw the largest YoY decrease in the suspected fraud attempt rate for digital transactions coming from Namibia, at -39.1%. When digital fraud in telecommunications did occur, TransUnion found the most dominant type in the industry globally was identity theft. This occurs when a customer uses a stolen identity to commit fraud, and the victim who is the identity owner is a real person.

Fraudsters have cycled through certain industries during the pandemic and are now rotating to another vulnerable sector. This makes these vulnerable sectors more prone to digital fraud attempts. The gambling industry exhibited the greatest YoY growth in the rate of suspected digital fraud coming from Namibia in Q1 2022 at 109.1%, with the most prevalent type of fraud in the sector globally being promotion abuse, where a user abuses site promotions such as refer-a-friend, reload deposit bonuses and free give away.

The financial services industry experienced the second highest YoY increase in Namibia at 27.5%, where first-party application fraud was the most common type of fraud. This occurs when an individual intentionally completes fraudulent applications that contain inaccurate or manipulated information to receive a lower rate or better terms for a policy or contract.

Year-over-year Growth Rates of Suspected Digital Fraud Attempts (Q1 2021 to Q1 2022)

Industries Affected by Fraud

Namibia

Global

Insurance

N/A

+134.5%

Gambling

+109.1%

+50.1%

Logistics

N/A

+42.7%

Travel and Leisure

+36.9%

+13.3%

Gaming

N/A

+6.9%

Communities (online dating, forums, etc.)

-12.9%

-6.1%

Retail

-15.7%

-7.6%

Telecommunications

-39.1%

-20.4%

Financial Services

+27.5%

-63.6%

TransUnion derived its conclusions on fraud against businesses on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication, and fraud analytics solution suite, TransUnion TruValidate. The percent or rate of suspected digital fraud attempts is those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions that were assessed for fraud.


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