Online fraud rises 23% in one quarter as people move online

Online card fraud has increased by 23% in the past quarter as more people use online transactions.

The finding comes from research by Feedzai, a cloud-based financial crime management platform. The quarterly report analyses financial crime and consumer spending trends from over 1.5 billion global transactions from April to July 2021.

It states 2021 has seen a 146% increase in P2P payments and a 109% rise in online transactions, putting it at nearly double the transactions through card-present or in-person methods. It also stated cash transactions declined by 44%.

Feedzai outlined the top five scams during the second quarter of 2021. These were purchase scams, social engineering scams, impersonation scams, account takeover fraud and smishing scams.

A purchase scam is where a consumer buys a product or service that never arrives and was the most common scam in the quarter, due to more people taking to online shopping.

Another one of the top five scam methods was smishing, which involves a fraudster sending a text message to trick a consumer into clicking dangerous links and sharing personal information.

Feedzai senior director of global data science Jaime Ferreira said, “Cashless payments were already on the rise, but the pandemic accelerated all forms of digital transactions when lockdowns hit.

“Millions more people experienced just how convenient digital payments and banking are when they couldn’t go to a bank branch or a restaurant or grocery store. Cashless transactions are not the future anymore, they are today. But the convenience comes with a cost. Financial institutions and retailers need to address the financial risk and higher complexity attacks that arise with the digital evolution.”

The report also analysed fraud rates in various cities of the US. The riskiest city was Las Vegas, with fraud up 411%. New York saw the second biggest rise, up 396%, then followed by Charleston and Nashville, which were up 251% and 193%, respectively.

Other cities with major increases in fraud rates were San Diego, Orlando, Chicago and New Orleans.

Copyright © 2021 FinTech Global

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