Philippines consumers still fall victim to digital fraud

CEBU, Philippines — Despite efforts to mitigate the threat of digital fraud, consumers in the Philippines continue to fall victim, with 8.3 percent of all digital transactions suspected to be fraudulent in 2023.

According to the latest report released by TransUnion’s global intelligence network, the 8.3 percent digital fraud recorded in 2023 is 66 percent higher than the global suspected digital fraud of 5 percent over the same period as reported in the TransUnion 2024 State of Omnichannel Fraud Report.

Findings from the report also indicated a possible shift in tactics employed by fraudsters attempting to engage with potential victims at an earlier stage in their consumer journey. For digital transactions where the consumer was in the Philippines, 13.3 percent of transactions associated with account logins were suspected to be Digital Fraud in 2023.

The second highest percentage of suspected Digital Fraud in the customer journey was account creation with 3.2 percent of those transactions suspected to be Digital Fraud.

The occurrence of suspected Digital Fraud at the initial stages of account login and creation is significantly higher compared to the final financial transaction stage which had a rate of 1.2 percent. This stage usually involves activities such as purchases, withdrawals, and deposits, which typically take place towards the end of a customer’s journey.

“This rise in suspected Digital Fraud in the account login and creation stages of the consumer journey may represent a paradigm shift of sorts among fraudsters,” said Yogesh Daware, chief commercial officer at TransUnion Philippines.

“Alongside traditional tactics to gain access to and ultimately compromise existing accounts, fraudsters are also increasingly choosing to create new accounts that they can control themselves. As data breaches continue to pose a threat to sensitive or confidential information across various industries in the Philippines, fraudsters could leverage synthetic identities assembled in large part using credentials gathered from such incidents,” Daware added.

The report further revealed that for transactions where the consumer or fraudster was located in the Philippines, the industry that saw the highest suspected Digital Fraud rate was retail at 11.8 percent in 2023 despite being down 18 percent from 2022. This was followed by financial services at 10 percent and communities (online dating, forums, etc.) at 5.2 percent.

Financial services tallied the greatest increase in the suspected Digital Fraud rate, up 41 percent in 2023 from 7.1 percent in 2022. While the total number of financial services digital transactions when the consumer in the Philippines was 51 percent higher in 2023 compared to the previous year, the volume of suspected Digital Fraud in this industry significantly outpaced this growth, with a surge of 113 percent from 2022 to 2023.

“As a result of credentials stolen in data breaches, 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, organizations across industries must take proactive measures to enhance their protection throughout the entire customer lifecycle. This entails strengthening capabilities at every touchpoint to ensure comprehensive protection for both businesses and consumers,” Daware noted.

The report further revealed that the volume of suspected Digital Fraud globally grew faster than the actual number of digital transactions worldwide. The volume of suspected Digital Fraud globally increased 14 percent year-over-year (YoY) in 2023 and 105 percent from 2019 to 2023, outpacing the six percent growth in digital transactions between 2022 and 2023, and 90 percent from 2019 to 2023.

In response to this, organizations across industries must take proactive measures to enhance their protection throughout the entire customer lifecycle. This entails strengthening capabilities at every touchpoint to ensure comprehensive protection for both businesses and consumers.

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries, including the Philippines.  In the Philippines, it is the first comprehensive private credit reference agency (CRA) and has helped Filipinos to better understand and manage their finances for more than a decade.