Fraudsters in Hong Kong Increasingly Targeting Communities Like Online Dating Sites Where the Rate of Digital Fraud Increased 72.6% from 2020 to 2021

• TransUnion finds communities, travel & leisure, and financial services were top three industries in Hong Kong with the highest year-over-year increase in rate of digital fraud attempts
• TransUnion releases global report on annual digital fraud trends, which found shipping fraud was up nearly 800% worldwide in the past year

The continuous growth of e-commerce could be behind a surge in shipping fraud, which is now the fastest growing type of digital fraud worldwide, according to the 2022 Global Digital Fraud Trends Report by TransUnion (NYSE: TRU), a global information and insights company and Hong Kong’s leading consumer credit reference agency. TransUnion observed an influx in shipping fraud in 2021, resulting in a 780.5% year-over-year (YoY) global increase. When compared to a two-year timeframe from 2019 to 2021, TransUnion data shows shipping fraud grew more than 1,500+%.

Shipping fraud – defined as when a buyer spoofs a shipping address or when a seller receives payment for goods or services, but never ships to the buyer – has quickly emerged as one of the top fraud types across a variety of industries. This issue, however, was most prominent in the logistics industry where consumers purchase goods online and are then reliant on third-party carriers for transportation and delivery of items.

“As consumers shifted from brick-and-mortar retailers to e-commerce platforms over the course of the pandemic, fraudsters gravitated toward where consumers were increasingly spending both time and money,” said Jerry Ying, chief product officer of TransUnion APAC. “Online shopping has become the ‘new normal’ on a global scale and as a result, the propensity for shipping fraud has also increased.”

As consumer adoption of digital channels has continued to accelerate, the global rate for all types of suspected digital fraud attempts increased 9.4% YoY from 2020 to 2021 and 52.2% from 2019 to 2021. In addition to shipping fraud, other types of fraud that experienced large increases when comparing 2020 to 2021 include business identity theft (+113.8%) and identity mining / phishing attempts (+104.8%) which both showed high rates of annual growth. According to TransUnion’s recent survey of 12,500 adults worldwide, 62% of consumers reported identity theft as their greatest concern when it comes to digital fraud.

Common Fraud Types Increased Across Industries from 2020 to 2021

“Nearly half of all consumers worldwide surveyed by TransUnion said they are conducting the majority of their transactions online, covering everything from managing personal finances and shopping to conducting business matters, which has led to an elevated consumer expectation in terms of both experience and security. To effectively mitigate digital fraud risks, businesses should ensure there are strong authentication processes in place as well as streamlined technology and multi-layered identity solutions. These solutions will help build trust with customers and thwart these fraud tactics,” said Ying.

Communities, travel & leisure, and financial services were top three industries in Hong Kong with the highest YoY increase in rate of digital fraud attempts

For transactions originating from Hong Kong, communities saw the largest percentage of annual fraud growth in 2021 with an increase of 72.6% YoY. Travel & leisure (51.8%) and financial services (40.9%) were the second and third industries with the largest growth in the rate of suspected digital fraud attempts. Gaming was another significantly affected industry and increased 21.0% YoY while gambling (20.8%) rounded out the top five.

The growth of digital fraud coming from Hong Kong in communities began since before the start of the pandemic. When comparing the rate of digital fraud coming from Hong Kong in communities from 2019 to 2021, it grew 125.6% potentially due to more people interacting socially online during the pandemic on places like online dating sites/apps. In 2021, global traveling had also been recovering in many other parts of the world, and fraudsters in Hong Kong appeared to try to take advantage of this.

Year-over-Year Growth Rates of Digital Fraud Attempts (2020 – 2021)

Digital fraud in financial services remains one of the prime targets for fraudulent activity both coming from Hong Kong and worldwide, and the rate of suspected digital fraud targeting that industry grew 40.9% and 33.5% YoY, respectively, making it an increasing area of concern for businesses and consumers alike. The number one fraud type worldwide in financial services is true identity fraud – where the victim is a real person and a fraudster uses a stolen identity to commit fraudulent transactions. As such, many financial institutions have taken steps to put greater security measures and authentication solutions in place, especially since digital banking is regarded as the industry standard.

“Fraud continues to impact a variety of different business sectors and fraudsters are always looking for the next opportunity. However, there are some industries that continue to have a target on their backs – such as financial services or social platforms – that should preemptively employ fraud detection solutions and strategies to better serve customers and protect their bottom line,” said Ying.

TransUnion came to its conclusions about fraud against businesses based 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 are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

For more information and insights on global fraud trends with Hong Kong figures, please download the report.