Since the beginning of the novel coronavirus pandemic, an unprecedented number of both business and financial transactions have shifted online. And where money and information go, so do fraud and other crimes. In a newly released report, “Know Your Customer” and digital ID verification firm Veriff identified a widespread increase in online fraud along with a number of trends.
Perhaps most notably, the “Veriff 2020 Fraud Report” found an overall 11% increase in identity fraud attempts in the second half of 2020. To gather its information, Veriff analyzed millions of verification sessions and data points globally.
Within the broad 11% increase in identity fraud attempts, the report found a 3X increase in the overall rates year over year in financial technology, or fintech, as well as the mobility sector. When it came to jumps within 2020, the mobility industry experienced a 16% increase in fraud rates during the second half of the year, while the fintech industry experienced a 7% increase.
In assessing the types of documents fraudsters used most often in their criminal activity, Veriff found that 51% use an ID card, while 27.4% used a driver’s license and 19.1% used a passport.
The U.S. suffered the highest fraud rate globally, reaching about 10%, followed by Vietnam, at 9%, and Nigeria, at 6%.
Among the most common types were new account fraud and account takeovers. To conduct new account fraud, criminals often create false identities, known as synthetic identities, that are based partially on fake information as well as real information such as Social Security numbers and other forms of data stolen from individuals. Account takeovers involve fraudsters gaining access to existing accounts and conducting transactions as if they are the legitimate account owner.
Not surprisingly, many of the fraud trends shifted throughout the tumultuous year. For instance, while there was a 16% increase in fraud rates in fintech, it initially tripled in the spring of 2020 as more consumers surged to online banking. Mobility fraud started trending higher right after the pandemic took hold in the U.S. but didn’t spike until September when it reached 8.6% from 1.2% in January.
Interestingly, cryptocurrency fraud rates didn’t move much over the course of 2020, according to Veriff. In fact, it was highest in January, at 8.8%, and reached 7.1% by December.
“This year, every company was forced to digitally transform. Mandated lockdowns accelerated fraud, creating opportunities for scammers to experiment with new techniques and adapt to a rapidly changing world,” said Janer Gorohhov, co-founder and chief product officer at Veriff, in a statement. “Even after the pandemic, we will see a new digital environment where strong identity verification will be the cornerstone in minimizing fraud across all sectors.”