There’s been a noticeable shift in fraud tactics, with fraudsters increasingly targeting earlier stages of the transaction process. According to a recent TransUnion report, 13.5% of transactions associated with online account creation were flagged as digital fraud last year.
This indicates that during the initial steps of opening a digital account—whether it’s account sign-up registration or loan origination—bad actors are actively seeking opportunities.
“This early phase new account digital fraud may represent a paradigm shift of sorts among fraudsters,” said Steve Yin, Senior Vice President and Global Head of Fraud Solutions at TransUnion in a prepared statement. “In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, they are increasingly choosing to create new accounts that they can control themselves. These fraudsters leverage synthetic identities assembled in large part through the use of credentials gathered as a result of one or multiple data breaches.”
Fraud by Sector
On a global scale, the retail, travel and leisure, and video gaming sectors experienced the highest percentage of digital account creation transactions that were suspected to be fraudulent. In the U.S., specifically, the highest percentage of digital fraud within the customer journey occurs during the account creation.
However, for transactions involving U.S. consumers or fraudsters, gaming remains the sector with the highest digital fraud rate, increasing from 10% in 2022 to 10.9% in 2023. Retail follows closely behind with a 6.1% in 2023. What’s more, the telecom industry witnessed the most significant increase in suspected digital fraud rate, rising by 54% year-over-year.
