ransUnion released last week its quarterly analysis of global online fraud trends, which found that the telecommunications, e-commerce and financial services industries have been increasingly impacted, while online gambling and gaming saw no increases in that area.
This quarter TransUnion analyzed fraud trends to reflect the changing economic environment with COVID-19. It used March 11, 2020 – the date the World Health Organization (WHO) declared the coronavirus (COVID-19) a global pandemic – as a base date for its analysis. Overall, the percent of suspected fraudulent digital transactions rose 5% when comparing the periods Jan. 1-March 10 and March 11-April 28, with more than 100 million suspected fraudulent transactions during the latter period.
Online gambling saw nearly no changes in terms of suspected fraud (1%). Online gaming, whose volume increased 64% amid the lockdown, showed a drop of 43% regarding suspected fraud.
When asked by Yogonet about the possible reasons for these trends, Angie White, Senior Manager at TransUnion’s Global Fraud & Identity Solutions Group, noted that given online gambling is largely reliant on online sports betting and there are very few sports right due to the COVID-19 pandemic, fraudsters have gone elsewhere. “As for online gaming, it is quite simple, fraudsters go where the money is and it isn’t immediately lucrative to target gaming companies since financial information isn’t generally shared there.”
White also said they’ve seen a big rise in COVID-19 phishing scams, which generally target harvesting login credentials and personal data. In their global TransUnion Financial Hardship Report, 29% of survey respondents indicated they had been targeted by a digital fraud scam related to COVID-19, she said. “This gives fraudsters easy access to more lucrative targets such as online retailers, banking and telecommunications all of which have seen increases in risky transactions.”
Angie White, Senior Manager at TransUnion’s Global Fraud & Identity Solutions Group.
How do you see online gaming/gambling companies are reacting to the sudden shift to online, when it comes to preventing the most common types of fraud you've found, which are promotion abuse and gold farming? Have you found any other new types or changes in this sense since the outbreak?
We’ve actually seen an increase in operators adding device-based reputation checks to prevent both promotion abuse and game abuses such as gold farming. By looking at device-based reputation, operators can see linkages between devices and accounts, which is key in spotting and stopping fraud rings that work together to perpetrate these types of abuses. Also key is evidence sharing, which allows operators to prevent a device with a history of abuse from moving from game to game.
What role do you think rising technologies such as blockchain, AI, etc. are playing in terms of fraud related to online gaming?
It’s always important to assess new technologies and determine what value they could bring to your business while sorting what’s hype and what’s real. With AI, for example, it’s very important to assess the quality of the data that is being used to train the system, how effective are they in predictive analysis, and are the results explainable and actionable. Because fraud tactics may vary from industry to industry, TransUnion recently released a machine learning model exclusively for online gambling operators, with algorithms trained to learn from the subtle patterns and trends specific to the gambling industry. Leveraging these kinds of innovative tools will enable operators to refine their fraud catch and reduce manual review queues.
What were you able to find regarding player generations affected by suspected fraud? Could you identify any pattern in this regard?
We did not assess age ranges impacted by suspected fraud in gambling or gaming. However, to better understand the impacts of COVID-19 on consumers and generationally overall, TransUnion surveyed 9,215 adults in the U.S., Canada, Colombia, Hong Kong, India, South Africa and the U.K. during the week of April 13. Nearly three out of 10 respondents (29%) said they had been targeted by digital fraud related to COVID-19, with Millennials (those persons between the ages 26-40) being the most targeted at 34%. Interestingly, Gen Z (those born in or after 1995) were the second most targeted. A common assumption is that fraudsters target older generations who are perceived to be less digitally capable but our data showed the opposite with COVID-19 scams.
How do you expect all these topics will unfold during the rest of the lockdown, or even after that if online gaming numbers remain high for a longer period?
Unfortunately, the large number of COVID-19 phishing scams seen during the pandemic is likely to have lasting impacts across all industries. There’s a new wave of breached credentials and personal data that’s going to fuel other types of fraud such as account takeover, payment fraud and identity theft over the longer term. It’ll be important for operators to consider their points of risk and what controls they can put in place to protect and retain players long term.