Digital transactions dominate the global market and frauds take off

Bot attacks on e-commerce websites are up 155% year-over-year, with digital businesses experiencing the biggest increase in attacks.

LexisNexis Risk Solutions has just published the results of its first study titled “Global State of Fraud and Identity” (or Global State of Identity and Fraud Survey), which explores research and insights from industry experts on recent statistics and trends on the true global cost of fraud and data from more than 39 billion transactions from the LexisNexis digital identity network, known as LexisNexis® Digital Identity Network® from January 2022 to June 2022.

This report demonstrates how digital transactions dominated the global market as the pandemic-driven trend of consumers shifting to online interactions became mainstream behavior. Digital transactions on the LexisNexis digital identity network grew 37% year over year over the same period.

The growth in digital transactions due to the pandemic continued to attract fraudulent attacks, with global companies seeing a 32% jump in the rate of human-caused attacks over the last 12 months, while attacks from automated bots increased by 38% compared to the previous year. year.

The move to mobile channels continued to increase, reaching 76% of all transactions on the digital identity network. Consumers today use an average of four connected devices to facilitate their online transactions. The addition of new e-commerce channels through marketplaces and within the broader banking ecosystem, as well as the proliferation of payment options such as Buy Now Pay Later (BNPL), digital wallets and QR codes, have contributed to a growth in transactions. on mobile channels.

As consumers embrace multiple digital channels and payment methods, they expect a positive customer experience and reliable security measures at every touchpoint. Identification and authentication solutions along the customer journey become mandatory as fraudsters develop attack strategies at every step. One out of every twelve account openings and one out of twenty password resets is an attack.

Increased connectivity leads malicious actors to continually develop new methods and increase the complexity and scale of their attacks. Cybercriminals are rapidly launching complex attacks at the weakest link in the omnichannel network, targeting individuals who are newer to online transactions and less aware of cybersecurity, while targeting companies that, in their eagerness to provide consumers with digital transaction options, have failed to deploy defenses and adequate prevention measures .

Large-scale cybersecurity breaches and recent digital evolution have created an ideal incubator for fraud to continue and thrive through identity theft. Studies show that optimizing identity verification approaches leads to safer omnichannel ecosystems.

Key takeaways from the Global State of Fraud and Identity report:

  • Bot attacks continue to rise: Enterprises worldwide have seen a 38% increase in malicious bot attacks over the past 12 months. Ecommerce businesses are particularly at risk, with the rate of bot attacks increasing by 155% annually. Regionally, EMEA saw the highest bot volume growth (98%), followed by Latin America (83%).
  • Man-made attacks also continue to grow: the rate of man-made attacks has increased by 32% per year worldwide. North America saw the biggest year-over-year increase (52%), followed by EMEA (19%).
  • Fraud Evolves with New Payment Methods: Increased adoption and high demand for contactless payment methods in the Asia-Pacific region are major contributors to the rise of QR code fraud. QR code payments and direct bank transfers are becoming the main payment channels in Southeast Asia and India. BNPLs are growing in popularity across the world and especially in the EMEA region, leading to an increase in fraud related to opening new accounts.
  • Risks across the customer journey: Fraud networks are increasingly industrialized and pervasive in the omnichannel digital ecosystem, leading to a dramatic increase in scams including social engineering, identity theft, password resets and account takeover fraud. The rising risk of account takeover fraud is one of the biggest threats, with rates of mobile app login attacks increasing by 211% annually.
  • Identity verification remains the top hurdle: Verifying customer identities remains a major challenge for global businesses. Global businesses cited a lack of real-time third-party data (46%) and a lack of real-time transaction tracking (43%) as the top two challenges in verifying customer identities across online channels.
  • Fraud networks target businesses across borders: Fraudsters work in complex networks. Each piece of data used is linked to other data that is valuable on a global scale. Therefore, companies and industries need greater global collaboration to combat fraud networks, but also to understand who the trusted consumers are. By gaining visibility into trusted consumers, companies can ensure more sustainable and reliable revenue and deliver superior products to a loyal consumer base.

“Digital fraud continued to grow as economies around the world reopened in 2022, as we predicted in our Fall 2021 Cybercrime Report, based on early trends in the United States and the region. The latest wave of scams shows how the fraud landscape will continue to change. Organizations must use flexible fraud prevention models along with an adaptive authentication approach,” said Stephen Topliss, vice president, fraud and identity, LexisNexis Risk Solutions.

“The use of digital identity intelligence can improve the omnichannel consumer experience by providing a unified and persistent view of associated risks, helping to increase conversion rates, customer satisfaction and loyalty. A layered solution approach, combining behavioral biometrics with risk-adaptive global digital identity data, enables companies to confidently make risk-based decisions while delivering a frictionless customer journey.”

Methodology

LexisNexis Risk Solutions’ “Global True Cost of Fraud” is an in-depth survey of 2,952 risk and fraud managers in the retail, e-commerce, and financial/lending services industries across APAC, EMEA, LATAM, and North America.

The analysis is based on transactions and attacks detected by the LexisNexis Digital Identity Network from January to June 2022, during near real-time analysis of consumer interactions across the entire online journey, from new account creation to logins, payments and other transactions. non-essentials like password resets and transfers. The legitimacy of transactions is analyzed based on hundreds of attributes, including device identification, geolocation, history and behavioral analysis.

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