Fraudsters Shift Focus to Insurance Industry During First Half of 2022

CHICAGO, Aug. 10, 2022 (GLOBE NEWSWIRE) -- For the second consecutive quarter, the rate of suspected global digital fraud attempts in the insurance industry experienced the greatest rise on a year-over-year basis, increasing 159% between Q2 2021 and Q2 2022. This follows a 134% increase between Q1 2021 and Q1 2022. Despite this rise in fraudulent activity in the insurance industry, TransUnion’s (NYSE:TRU) quarterly fraud analysis observed the rate of suspected digital fraud attempts across industries globally declined by approximately -14% between Q2 2021 and Q2 2022.

TransUnion came to its conclusions about fraud against businesses based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions that were assessed for fraud.

Industries seeing the largest declines in the rate of suspected digital fraudulent activity from Q2 2021 to Q2 2022 included gaming, travel and leisure, and retail. TransUnion only observed increases in insurance and logistics during this time period. For transactions originating from the U.S., TransUnion also only observed increases in the rate of suspected digital fraud in insurance and logistics year over year. However, the insurance increase was much smaller than globally, rising 22% when comparing Q2 2021 to Q2 2022. Logistics rose 15%.

First-party application fraud was the top insurance-focused fraud impacting that industry. This type of fraud involves fraudulent applications containing intentionally inaccurate or manipulated information provided by the policyholder with the intention of receiving certification, lower rates or better terms for a policy/contract.

“We have observed interesting trends in the first half of 2022 with suspected fraudulent activity in the insurance industry continuing to be elevated during the first six months of the year,” said Shai Cohen, senior vice president of global fraud solutions at TransUnion. “In recent years, we’ve seen fraudsters shift their industry focus each quarter. At this time, we believe the insurance industry is seeing more ‘soft fraud’ because some consumers may be representing their policies incorrectly in an effort to save money, especially in a high inflation environment that places more pressure on their wallets.”

Suspected Fraud Attempts Shift to New Industries Globally

Shifts in U.S. Fraud Mostly Resemble Global Trends

Overall, the rate of suspected digital fraud across all industries decreased nearly -19% YoY from Q2 2021 to Q2 2022 in the United States. TransUnion observed the largest declines from U.S.-based transactions in gaming (-65%) and gambling (-49%). Retail (-32%) and financial services (-28%) also saw declines.

While insurance and logistics were the only industries to see increases, the types of fraud were much different. Whereas insurance focused on application fraud, logistics was dominated by shipping fraud. This is a type of fraud where a buyer spoofs a shipping address or a seller receives payment for goods or services, but never ships to a buyer.

Digital fraud continues to be a constant in the lives of many U.S. consumers. TransUnion’s latest Consumer Pulse study found that nearly four in 10 (38%) American adults reported experiencing digital fraud attempts. And 11% fell victim to fraud such as phishing, identity theft or other types of fraud.

“For industries experiencing stabilization of fraud instances, the focus has been identifying more of the good transactions and customers to allow them to pass with less friction,” said Sean Donnelly, senior vice president and go-to-market global fraud solutions at TransUnion. “Strong fraud and authentication practices decrease false positives and focus fraud-fighting resources on the minority of interactions that warrant scrutiny. By reducing the pool of manual reviews and customer interrogations, organizations can dramatically reduce costs, increase revenue, and improve the overall customer experience.”

For worldwide and regional breakdowns around how much the suspected digital fraud attempt rate recently changed, what types of fraud are most prevalent in certain industries and more, please download the infographic.

About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good®.

A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.

http://www.transunion.com/business