PHL faces higher digital fraud rate than global average

By Francis Allan L. Angelo

A new study by TransUnion has revealed that 8.3% of digital transactions in the Philippines were suspected to be fraudulent in 2023.

The figure is 66% higher than the global average of 5%, according to the TransUnion 2024 State of Omnichannel Fraud Report.

The report highlighted a significant rise in global suspected digital fraud, which increased by 14% year-over-year in 2023 and by 105% from 2019 to 2023.

This outpaced the 6% growth in digital transactions from 2022 to 2023 and the 90% increase from 2019 to 2023.

Early Stages of Consumer Journey at High Risk

In the Philippines, the highest risk of digital fraud was associated with account logins, where 13.3% of transactions were suspected to be fraudulent. Account creation followed, with 3.2% of transactions suspected to be fraudulent. The final financial transaction stage, which includes purchases, withdrawals, and deposits, had a significantly lower fraud rate of 1.2%.

“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.”

Retail Industry Most Targeted

Retail saw the highest suspected Digital Fraud rate in 2023 in the Philippines,

while financial services saw the highest growth rate

Industry Philippines suspected Digital Fraud attempt rate 2023 Philippines suspected Digital Fraud attempt rate % change YoY Global suspected Digital Fraud attempt rate 2023 Global suspected Digital Fraud attempt rate % change YoY
Retail 11.8% -18% 8.7% 21%
Financial Services 10.0% 41% 4.3% 3%
Communities (online dating, forums, etc.) 5.2 % 9% 4.6% 17%
Logistics 4.4% -54% 0.9% -30%
Public Sector 3.9% 4% 1.4% -18%
Travel & Leisure 3.2% -2% 2.3% 8%
Telecommunications 2.4% -44% 4.5% 111%

Source: TransUnion TruValidate™

Retail was identified as the industry most targeted by suspected digital fraud in the Philippines, with an 11.8% fraud rate in 2023, despite a decrease of 18% from 2022. This was followed by financial services at 10% and communities, such as online dating and forums, at 5.2%.

The financial services sector saw the greatest increase in suspected digital fraud, rising by 41% from 7.1% in 2022 to 10% in 2023. The volume of suspected digital fraud in this industry surged by 113% from 2022 to 2023, outpacing the 51% increase in digital transactions.

“While the global retail industry has consistently been among those with the highest suspected digital fraud attempt rates in recent years, we saw it placed at the top of the list both locally and globally in 2023. More concerning is the situation in the Philippines, where the suspected digital fraud rate across various industries exceeds global averages, except for telecommunications,” said Daware.

Enhancing Protection Measures

Daware emphasized the importance of proactive measures to combat fraud. “It is crucial for organizations across industries to 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’s findings are based on its TruValidate product suite, which helps secure trust across channels and deliver efficient consumer experiences. The rates of suspected digital fraud reflect transactions that met conditions such as denial due to fraudulent indicators or corporate policy violations, as determined by TransUnion customers.

For more detailed insights, the full TransUnion 2024 State of Omnichannel Fraud Report is available for download.