Internet fraud and forgery have always been a part of the online industry. It’s a form of white-collar crime that is significantly increasing across the globe. However, during COVID-19, the cybercrime rate increased exponentially.
When the global pandemic negatively impacted businesses all over the world. It came with some lucrative changes as well. Among such changes was an increase in online sales and shopping. As of 2019, online sales touched the benchmark of USD 1.92 billion. Due to the pandemic, a new bench score was set with USD 3.5 trillion worldwide.
However, these fascinating figures opened a new gateway for intense cybercrimes. As per the assessment by Interpol, these cyberattacks shifted from individuals and small businesses to enterprises, government, and critical infrastructures. TransUnion identified nearly 100 million suspicious transactions during March and April of 2020.
In 2015, it was calculated that businesses lose USD 400 billion annually due to data breaches and online fraud. But due to an extreme boost in cyber-criminal activities last year, Cybercrime Magazine predicts the loss to cross USD 10.5 Trillion annually.
Shai Cohen, the senior VP of Global Fraud & Identity Solutions at TransUnion reviewed the crises. As per him, billions of people were forced to stay at home. Due to this, industries got disrupted in unimaginable ways. The massive hit of cybercrime is the sole reason for the sudden shift to the online world. Before businesses could adapt to the change, the fraudsters gained from the situation.
Types of Frauds That Affected Different Industries
From the period of January 1, 2020, till March 10, 2020, and March 11, 2020, to April 28, 2020, TransUnion analyzed leading industries. They have identified suspected fraud increases in leading industry sectors and sorted the top types of fraud they experienced. TransUnion has pinpointed the highest online fraud in their respective industries.
|Industry||Suspected Fraud Increase||Top Type of Fraud|
|Financial Services||11%||Identity theft|
|Public Sector||-1%||Account takeover|
|Travel & Leisure||-38%||Credit card|
Every three out of ten respondents claimed they faced online scams and digital fraudulence during COVID-19. When it comes to digital fraud, it’s a common conception that the older generation is an easy target. However, 2020 has added insult to the injury. 34% of millennials got scammed during the pandemic.
Impact of Fraud on Leading Industries
Following are the leading sectors that are the easiest target for scammers. These 5 industries play a vital role in the development of the economy. However, they all face severe online frauds every year that damages their financials beyond limits.
Banking & Financial Sector
Either it’s a bank or a credit lender or a mortgage and real estate dealer. The financial service industry is one of the leading sectors that’s always on the edge of risk. The estimated loss is in billions of dollars every year. These frauds range from manipulated fake identities to counterfeiting, to hacking, to other criminal activities.
The basic reason for financial organizations being the top targets of fraud is simple. These businesses offer the biggest size of the prize with an exceptional volume of transactions. The majority of the time, these fraudulent activities are driven by systematized fraud rings. They are tech-savvy and have all the necessary details to ensure the highest damage in a matter of seconds.
As per research, the banking sector of the UK stops £4.5 million worth of fraud every day. This makes $6.1 million dollars. However, after all these limitations, the UK banking and financial sector recorded £112 million worth of fraud in 2019. In dollars, this fraud is estimated to be USD 152.6 million for the UK.
With the technological revolution, pay per click (PPC) is taking over the financial sector by storm. However, this new tech is also leaving the sector exposed to the highest fraud. It’s estimated that the finance and banking sector may lose USD 545 million in hands of click fraud.
Challenges are continuously growing in the financial sector with on-demand services. The hype of mobile banking is already gaining prominence. The financial organization must find a solution at the earliest to protect their profitability and mitigate the atrocious risk.
Fraud in the healthcare sector has an enormous impact. It's estimated that the fraud is usually more than tens of billions of dollars a year. The leading frauds in the healthcare sector are falsified claims, misleading information, inappropriate diagnoses, cost-shifting, upcoding on tests to surge the reimbursements, etc.
Even though with advanced technological assistance and leading payment modules, only 5% of frauds are detected. Currently, healthcare insurance fraud is leading with nearly USD 80 billion damages a year across the globe. It's expected that US healthcare fraud can exceed USD 3,483.12 million by 2027.
Today, healthcare entities require solutions that can put a halt to these frauds. They require transparency into the fraud risks by the means of linking and predictive claims. Using big data and other resources, healthcare can save itself from leading frauds.
Billions of dollars scam annually is incurred in the insurance sector. The FBI confirms that the insurance fraud, not including healthcare insurance, is more than USD 40 billion a year. This insurance fraudulence costs USD 400 to USD 700 a year in form of increased premiums on average per US family.
Fraudulent claims cost USD 80 billion annually to the United States. Either it's home insurance or auto or commercial insurance, none of the sectors is immune to the fraud. 1 in 10 American citizens provides falsified information when buying auto insurance. Fraud in auto injury insurance claims totaled USD 7.7 billion in 2012.
The fraud investigators must lookup solutions that can save them from fraud. They need to incorporate cross-industry data to handle the risks and make good decisions. This can also not compromise customer overall satisfaction.
According to the LexisNexis® True Cost of Frauds study, 2020 saw a phenomenal increase in online frauds worldwide. The cost associated with retail fraud increased exponentially. Where merchants are paying USD 3.78 for each dollar of fraud. This figure was USD 3.35 in 2019.
In the retail sector, shoplifting is common fraud done by walk-in customers. Shoplifting fraud totaled USD 61.7 billion in 2019 which was USD 50.6 billion in 2018.
The majority of retail fraud encompasses unauthorized transactions, vendor collisions, and fraudulent data. These frauds are directly affecting customer loyalty in the sector causing much more disruption than ever. Virtual currency is also adding fuel to the fire. These Ponzi schemes are causing 99% of scams to the sector.
The retail sector has to come up with alternative solutions to avoid potential fraud, minimize risks, and reduce concerns that affect sales.
The shift from the brick-and-mortar model to eCommerce has opened the gates for cybercrime. The retailers are offering new sales channels and processing millions of orders. With this increase, the fraudsters have found ingenious ways to attack and loot them.
eCommerce frauds range from refund fraud to account hack issues to cash on delivery frauds. The buy online and the pick-up in-store frauds are also damaging the sector. Currently, card not present (CNP) fraud is crushing the eCommerce sector. It's expected that the fraud will increase by 14% by 2023 marking a loss of USD 130 billion.
Based on research by WorldPay, 4 types of eCommerce frauds are breaking the backbone of the sector. They are phishing, credit card not present, identity theft, and account thievery. Identity theft alone was increased by 8% in 2018, affecting 16.7 million US consumers.
The eCommerce sector must fight back these frauds using data mining and analytical tools. With card management tools, the sector can protect itself from card not present theft as well.
The Bottom Line
Online frauds are affecting every industry and crushing them. Businesses need to step up their game and protect their user’s information and avoid potential frauds. Industries must coordinate with authentic development companies to help them upgrade their business model.
At Tkxel we provide committed services, assisting the industries. Keeping the frauds in mind, we make sure to develop robust security strategies to support your digital infrastructure that can help them in fighting them. Get connected with us for end-to-end cybersecurity services today.