TransUnion Report Finds Suspected Digital Fraud Rate in Hong Kong Significantly Higher Than Other Global Markets
6.6% of Hong Kong digital transactions were suspected to be fraudulent in 2023 – 32% above the global rate
The newly released TransUnion (NYSE: TRU) 2024 State of Omnichannel Fraud Report, based on proprietary insights from TransUnion’s global intelligence network, found that 6.6% of all digital transactions where the consumer was in Hong Kong were suspected to be Digital Fraud in 2023. This number is 32% higher than the global suspected Digital Fraud rate of 5% over the same time period.
The report further revealed that the volume of suspected Digital Fraud globally grew faster than the actual number of transactions worldwide as well. With the volume of suspected Digital Fraud up 14% year-over-year (YoY) in 2023 and 105% from 2019 to 2023 globally, this growth continues to outpace the growth in overall digital transactions, which rose 6% between 2022 and 2023, and 90% from 2019 to 2023.
Fewer victims in Hong Kong despite a higher suspected Digital Fraud rate
Similar to the global findings, consumers in Hong Kong were regularly targeted with scams or other forms of deception to gain access to accounts. In December 2023, half of the surveyed Hong Kong consumers (50%) reported being targeted by fraudsters through email, online, phone call or text messaging schemes in the preceding three months. However, only 5% of Hong Kong consumers that reported being targeted by fraud said they fell victim – a relatively lower figure compared to the 11% of consumers in the 18 countries and regions surveyed. This lower percentage in Hong Kong might be attributed to rising consumer awareness amid more efforts from local regulators and industry players to provide anti-fraud education, as well as other preventive measures.
Among those who said they were targeted, phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) was the leading type of fraud consumers reported experiencing both in Hong Kong and globally.
Account login and account creation present highest risk in the customer journey
The report also showed that there might be a shift in tactics by fraudsters hoping to engage earlier in the transactional process along the digital customer journey. For digital transactions where the consumer is in Hong Kong, 11.1% of transactions associated with digital account login were suspected to be fraudulent in 2023. The second highest percentage of suspected Digital Fraud in the customer journey was account creation with 4.9% of all relevant online transactions were suspected to be fraudulent in 2023. Examples of this type of transaction include account signup, registration and loan origination.
The occurrence of suspected Digital Fraud at the initial stages of a customer journey (account login and creation) for transactions where the consumer is in Hong Kong was significantly higher compared to the final financial transaction stage, which had a rate of only 0.2% in 2023. This final stage involved activities such as purchases, withdrawals and deposits, which typically take place towards the end of a customer’s journey.
“This early phase account login and account creation Digital Fraud may represent a paradigm shift of sorts among fraudsters,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Being one of the first Asian markets to issue virtual banking licenses in 2019, Hong Kong significantly accelerated the digitalisation of customer journeys across various industries, not just in the banking sector. While this has brought convenience and improved user experiences, it has also created additional touchpoints that can be exploited by fraudsters. With numerous data breaches occurring worldwide and advancements in technologies like deepfakes, it isn’t surprising that fraudsters are now taking advantage of vulnerabilities and increasingly focusing their attacks on the early stages of a customer journey.”
Retail, financial services and travel and leisure among industries most targeted by suspected Digital Fraud in Hong Kong
According to the report, for transactions where the consumer or fraudster was located in Hong Kong, the highest Digital Fraud rate was in retail, at 8.4% in 2023, down 28% from 2022. This was followed by financial services, and travel and leisure which both were 7.8% in 2023. For transactions where the consumer was in Hong Kong, the financial services industry saw the greatest increase in the suspected Digital Fraud rate, up 190% YoY in 2023.
This surge aligns with the increase in fraud cases reported by the city’s central banking institution – the Hong Kong Monetary Authority (HKMA). In 2023, the HKMA received over 1,200 fraud-related banking complaints, more than double the number for 2022. This was in line with a 52% increase in deception cases reported to law enforcement in the first ten months of last year, with estimated losses to victims of about HK$7.2 billion[1].
Retail saw the highest suspected Digital Fraud rate in 2023 in Hong Kong and globally, while financial services saw the highest growth rate in Hong Kong
Industry | Hong Kong suspected Digital Fraud attempt rate 2023 | Hong Kong suspected Digital Fraud attempt rate % change YoY | Global suspected Digital Fraud attempt rate 2023 | Global suspected Digital Fraud attempt rate % change YoY |
Retail | 8.4% | -28% | 8.7% | 21% |
Financial services | 7.8% | 190% | 4.3% | 3% |
Travel and leisure | 7.8% | -48% | 2.3% | 8% |
Telecommunications | 5.7% | 49% | 4.5% | 111% |
Communities (online dating, forums, etc.) | 4.8% | 28% | 4.6% | 17% |
Insurance | 2.5% | 16% | 1.5% | -8% |
Logistics | 1.5% | 5% | 0.9% | -30% |
Source: TransUnion TruValidate™
“In recent years, the global retail industry has consistently been among those with the highest suspected fraud attempt rates. However, in 2023 we saw it placed at the top of the list both locally and globally,” said Ying. “As a result of credentials stolen in data breaches, often in industries other than retail, 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 emerging shift in fraudulent behaviors, organisations across industries must proactively enhance their protection throughout the entire customer lifecycle. This entails strengthening detection and response capabilities at every touchpoint to ensure comprehensive protection for themselves and consumers.”
TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate™. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) determined to be fraudulent upon customer investigation or 4) determined to be a corporate policy violation upon customer investigation — compared to all transactions it assessed for fraud.
Download the TransUnion 2024 State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report includes Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia.
