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COVID-19 to increase fraud rates by 60%, Feedzai's financial crime report finds

Thursday 26 November 2020 09:24 CET | News

Fraudsters have seized opportunities provided by the shift to online transactions due to COVID-19 pandemic causing networks’ fraud rates to increase by 60%, according to Feedzai.

Not only was there more fraud attempted, but the dollar value of each attempted fraudulent transaction was also 5.5% higher than it had been the six months preceding the pandemic. Card cloning, high-speed ordering/spending, and high-risk merchant category code have been identified as top 3 global fraud contributors in 2020 in Feedzai’s Quarterly Financial Crime Report which contains financial crime indicators and consumer trends.

The digital-first revolution brought on by the pandemic has revealed that criminals adjusted to the new reality and that consumers adapted their shopping habits to the realities of lockdowns and social distancing requirements. In both cases, they are not likely to switch back, with 30% of consumers opened new accounts during the pandemic, and 75% of customers plan to maintain digital banking habits. A further 56% cited trust as the reason they opened new accounts with their current financial institution.

The shift to ecommerce and online banking produced a 30% rise in CNP transactions from April through August as compared to Q1 2020. As expected, the move away from in-person transactions realised a 22% drop in April for card-present (CP) transactions.

With new social distancing guidelines and a dramatic change in people’s social behaviour, which prohibited indoor gatherings, came with new shopping needs. One sector has seen an uptick: sporting goods. Transactions increased during Q2 and Q3, reaching 2019 holiday shopping levels.

Moreover, transportation, fuel transactions, and travel refunds have been greatly impacted by the current pandemic. For instance, public transportation dropped by 89% and the number of gas station transactions dropped by 36% compared to Q1, and travel refunds rose 150% in March, compared to early 2020, but after a difficult start, refund rates returned to their normal levels.

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Keywords: online banking, ecommerce, card cloning, high-risk merchant, financial crime, Feedzai, digital banking, contactless payments
Categories: Securing Transactions | Digital Identity, Security & Online Fraud
Countries: World
This article is part of category

Securing Transactions