• Amongst businesses, almost one quarter (24%) of Hong Kong respondents identified fraud as the top risk with the greatest potential impact on their organisation
• Third-party fraud (25%), account takeover (24%) and scam or authorised fraud (21%) were the top three causes of fraud losses reported by business leaders
• More than half (55%) said their customers had been victimised by caller ID spoofing according to business leaders, while 37% of consumers reported being targeted with digital fraud in a recent three-month period

Insights from TransUnion’s (NYSE: TRU) H2 2026 Update to the Top Fraud Trends Report reveal that identity and trust has become the new battleground in Hong Kong’s evolving fraud landscape. Fraudsters increasingly exploit the trust consumers place in familiar communication channels to gain access to identity data. Once identity information is compromised, artificial intelligence (AI) and automation enable fraudsters to turn it into more convincing, scalable and personalised attacks, further challenging businesses’ ability to determine whether an identity or interaction can be trusted.

The evolving nature of fraud continues to expose Hong Kong businesses to considerable financial losses according to a survey conducted by TransUnion of 1,600 business leaders across eight markets — Hong Kong, Brazil, Canada, India, the Philippines, Spain, the United Kingdom and the United States. Among the 200 Hong Kong respondents, they reported their companies lost an equivalent of 5.1% of annual revenue on average due to fraud in the past year.

Given the scale of these financial losses, Hong Kong businesses clearly recognised fraud as a significant threat. Almost one-quarter (24%) of surveyed business leaders identified it as the risk with the greatest potential impact on their business, making it the greatest risk type. When asked which fraud has been the predominant cause of losses in the past year, third-party fraud (use of stolen identities to open accounts) was the top answer at 25%. This was followed by account takeover (unauthorised individuals take over someone’s online account) at 24%, and scam or authorised fraud (a dishonest scheme intended to deceive a person into giving up something of value) at 21%. While these fraud types take different forms, each exploit identity or trust as a point of vulnerability.

Identity-Based Fraud Accelerates as Trusted Communications Channels and Data Breaches Fuel Risk

This exploitation is increasingly evident across different communication channels. More than half of Hong Kong businesses reported that their customers had been victimised by caller ID spoofing, where fraudsters deliberately falsify the caller identity to impersonate trusted organisations or individuals, at 55%. This was followed by SMS spoofing at 54% and email spoofing at 48%.

Consumers’ experiences further demonstrate how frequently fraudsters use familiar communication channels to target personal information. According to TransUnion’s Consumer Pulse Study for Q3 2026, more than one-third (37%) of Hong Kong consumers reported being targeted by fraud through email, online platforms, phone calls or text messages between April and July 2026. Among those who said they were targeted, the top scheme they reported was vishing at 36%.

Beyond personal information obtained through trusted communication channels, data breaches also continuously feed the identity-based fraud supply chain. This exposure is already affecting Hong Kong consumers, with one in five (20%) reporting that they had been notified of their identity or account information being exposed in a data breach between April and July 2026.

As more genuine identity information becomes available, fraudsters can use AI tools to create increasingly convincing synthetic identities, where real and fabricated information are merged to form a fictitious identity for the purpose of illicit activities. This growing sophistication is reflected in the experience of Hong Kong businesses, with almost one-third (32%) of business leaders reporting that synthetic identity fraud had increased by more than 25%. Looking ahead, when asked which fraud types they expect to grow the most over the next 12 to 24 months, 68% ranked synthetic identity among their top three concerns. However, over half (54%) said their organisations were least prepared to manage this type of fraud.

“Fraud in Hong Kong is increasingly an identity and trust challenge. Fraudsters are exploiting trusted communication channels to gather personal information, which can then be combined with AI and automation to create more convincing, scalable and personalised attacks,” said Devon Sin, chief product officer at TransUnion Asia Pacific. “As fraud evolves, verifying an isolated identity at a single point in time is no longer enough. Businesses need a more holistic view of trust by combining identity, behavioural, device and network intelligence to better distinguish genuine consumers from increasingly sophisticated fraud across the consumer lifecycle.”

Business Face Growing Difficulties Distinguishing Genuine Customers from Fraudulent Ones

As more identity information is exposed, fraudsters can feed this data into AI tools to create sophisticated synthetic identities and deepfake documents, making traditional ways of identity verification increasingly difficult. The scale of this challenge is reflected in the report, in which 97% of Hong Kong respondents expressed concern that fraud risks are evolving faster than their businesses’ ability to detect and prevent them. Hong Kong is also stepping up efforts to address AI-enabled fraud. In its 2026 Policy Address¹, the government outlined plans to regulate deepfakes and remove online content that may constitute financial fraud, as concerns grow over the misuse of AI technologies.

The increasing sophistication of AI-assisted identity fraud is also placing greater operational pressure on businesses. Almost half (45%) of the Hong Kong business leaders surveyed reported spending over 30 minutes manually reviewing each individual transaction for potential fraud, while one in five (20%) said that a quarter or more of manually reviewed account applications were ultimately legitimate customers. The findings lend support to resource strain, with almost all (97%) of respondents reporting fraud has led to increased operational costs for their business.

“The rise of AI-assisted fraud is making it increasingly difficult for businesses to distinguish genuine customers from fraudulent ones. As fraud becomes more sophisticated, organisations face growing operational pressure to investigate suspicious activity while maintaining a seamless customer experience,” added Sin. “Identity has become one of the most valuable assets for fraudsters. In an era where fraudsters can increasingly mimic legitimate identities and behaviours, businesses need to look beyond any single signal to make trust decisions. Greater intelligence sharing and a more connected view of risk will be critical to combating evolving fraud, protecting customers and supporting sustainable growth.”

Download the TransUnion H2 2026 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

¹ 2026 Policy Address: Combating the use of AI in criminal activities

• Hong Kong’s suspected digital fraud attempt rate was 2.7% in the first half of 2025
• The top three predominant causes of fraud losses identified by Hong Kong businesses were third-party fraud, account takeover, and scam or authorised fraud
• Retail exhibited the highest rate and year-on-year (YoY) rate increase in suspected digital fraud from Hong Kong among industries analysed, surpassing all other countries and regions in the study

Insights from the newly released TransUnion (NYSE: TRU) H2 2025 Update to the  Top Fraud Trends Report revealed that 2.7% of all attempted digital transactions where the consumer was in Hong Kong were suspected to be digital fraud¹ in the first half of 2025, lower than the global rate of 3.8%. Compared to a year ago in the first half of 2024, Hong Kong’s suspected digital fraud dropped from 3.8%, indicating positive progress in the city’s efforts to combat fraud.

Despite this improvement, fraud continues to pose significant financial risks to businesses in Hong Kong. According to a business survey conducted by TransUnion, which gathered insights from business leaders across six markets — Hong Kong, Canada, India, the Philippines, the United Kingdom and the United States, 200 Hong Kong respondents reported their companies lost an equivalent of 7.1% of annual revenues on average due to fraud in the past year, representing a total of HK$92 billion. In addition to financial losses, more than half (51%) of respondents said they were extremely or very concerned about the impact of fraud on their businesses, underscoring the continued importance of fraud prevention as a strategic priority.

Hong Kong businesses strengthen fraud defences, but confidence in fraud identification remains subdued

Hong Kong businesses are actively strengthening their defences against fraud. According to the same business survey, three quarters (75%) reported optimising their fraud detection models at least quarterly with 21% doing so monthly. Hong Kong also recorded the highest percentage of business leaders among surveyed markets reporting deploying large fraud operations teams with more than 20 analysts. However, these efforts did not fully translate into confidence, with only 56% of Hong Kong business leaders feeling extremely or very prepared to identify fraud attacks involving multiple channels, placing Hong Kong at the lowest confidence level in the study.

To dive deeper into the root causes of fraud losses, business leaders in Hong Kong were asked to identify the main contributors over the past year. Third-party fraud, involving the use of stolen identities to open accounts, was cited by 26% as the leading cause. This was followed by account takeover (22%), where unauthorised individuals take over someone’s online account, and scam or authorised fraud (18%), a dishonest scheme intended to deceive a person into giving up something of value. These findings indicated a strong prevalence of identity theft and unauthorised access.

Phone fraud emerged as a significant concern for both consumers and businesses

On the other hand, fraud also remained a persistent threat to consumers. According to TransUnion’s Consumer Pulse Study for Q2 2025, more than one-third (37%) of Hong Kong consumers reported being targeted by email, online, phone call, or text messaging fraud from February to May 2025, with 4% falling victim. Among those targeted, vishing (fraudulent phone calls meant to trick consumers into revealing data) was the most common scheme, affecting 32% of respondents.

Hong Kong business leaders have also acknowledged concerns around phone-related threats and reported actively monitoring associated risks, as reflected in TransUnion’s business survey. Close to 80% of business leaders expressed being extremely, very or moderately concerned about phones being compromised or taken over by fraudsters during the transmission of one-time passcodes. Similarly, 43% ranked phone number reputation (phone number attributes that may signal fraud such as type of phone, fraud history and identity linked to it) among their top three most important fraud prevention solutions, the highest among all surveyed markets.

“It is encouraging to see Hong Kong making progress in combating and preventing fraud, as highlighted in TransUnion’s latest Top Fraud Trends Report. However, as fraudsters continue to evolve and adapt, our data also showed that both businesses and consumers remain aware of increasingly sophisticated schemes such as identity-based fraud and phone-related scams,” said Devon Sin, chief product officer at TransUnion Asia Pacific. “To maintain vigilance, businesses must tailor their fraud strategies to local realities, striking the right balance across technology, processes and awareness to stay ahead of complex threats. At the same time, individuals should proactively safeguard and monitor their personal information through trusted tools to reduce vulnerability and stay ahead of evolving risks.”

Fraudsters shifted tactics to exploit vulnerabilities across different sectors

Compared to the first half of 2024, financial services demonstrated encouraging progress in fraud mitigation, with the suspected digital fraud rate for attempted transactions where the consumer was in Hong Kong declining by 21% YoY. The improvements were likely supported by the Hong Kong government's continued efforts in cyber defence and public education². However, fraudulent activities remain persistent in the retail industry — a reminder that fraudsters are constantly seeking vulnerabilities and will not hesitate to exploit emerging opportunities. Sustained vigilance across all industries remains essential.

In the first half of 2025, retail recorded the highest suspected digital fraud rate among industries analysed for transactions where the consumer was in Hong Kong at 19.4%, representing a sharp 155% YoY rate increase. This positioned Hong Kong with the highest suspected digital fraud rate and YoY rate increase in the retail sector among all markets analysed. This trend aligns with official data from the Hong Kong Police Force, which shows that the majority of online scams reported during the first half of 2025 were linked to online shopping and job advertisements³. The telecommunications sector recorded the second highest suspected digital fraud rate from Hong Kong at 8.9%, followed by the logistics sector at 7.9%, with notable YoY rate increases of 128% and 117% respectively.

When it comes to the consumer lifecycle, fraudsters targeted vulnerabilities at the early stages of the digital journey, particularly during account logins (such as login attempts and failed login events). The suspected digital fraud rate during this stage stood at 10.8%, more than double the global average of 4.3%, making it the riskiest stage within the digital journey. In contrast, the suspected digital fraud rate during account creation (3.8%) and financial transactions (0.3%) from Hong Kong remained below the global average, possibly reflecting the city’s stronger onboarding controls and robust payment security.

Suspected digital fraud rate from Hong Kong by industry, retail tops in rate and year-on-year change

 Source: TransUnion TruValidate™

"Fraudsters are highly adaptive. Even as awareness among businesses and consumers grows, cybercriminals continue to search for vulnerabilities across sectors and at every stage of the digital consumer lifecycle," added Sin. "Protecting the organisations and customers is non-negotiable. An enterprise-wide approach that leverages smarter fraud detection and breaks down fragmented systems is essential. Ultimately, strengthening each layer of defense and remaining agile to evolve as fast as fraudsters do will help businesses foster long-term resilience, minimise unnecessary customer friction and set the foundation for a more trusted digital economy."

TransUnion came to its conclusions about digital fraud and data breaches based on intelligence from its array of TransUnion fraud prevention solutions. Specific country and regional data in the report includes Botswana, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Hong Kong, India, Kenya, Mexico, Namibia, Nicaragua, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia. Download the TransUnion H2 2025 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

1 The rate or percentage of suspected digital fraud attempts reflects those which TransUnion customers determined to meet one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country or region when conducting a transaction. Global statistics represent every country worldwide and not just the selected countries and regions.

2 Hong Kong Monetary Authority: HKMA, HKPF and HKAB jointly announce new measures to strengthen the response to fraud and money laundering

3 HK Government Press Release: Remarks by Secretary for Security at media session after Fight Crime Committee meeting (with video) (only available in Traditional Chinese)