CHICAGO—A new report reveals fraud is costing businesses nearly 7% of their annual revenue, with a growing percentage of the losses driven by synthetic identity lending fraud.
Among the key findings in the study— TransUnion’s H2 2024 Update to the State of Omnichannel Fraud Report—were the results of a TransUnion survey of more than 800 business leaders in Canada, India, the U.K. and the U.S. which revealed total fraud losses of 6.5% equivalent of their company’s revenue.
“This totaled approximately $359 billion among these business leaders’ organizations, a number which projects out exponentially greater when considering these represent only a small percentage of business leaders. Among those surveyed in the U.S., they said their company lost the equivalent of 6.7% of their revenue due to fraud over the past year, totaling $112 billion,” TransUnion said.
In addition, 75% of the global survey respondents said that every type of fraud they measured stayed the same or increased year-over-year. Nearly half of respondents indicated that scam/authorized fraud, wherein a person is tricked into giving up something of value, saw the greatest YoY increase. It was also the most common cause of fraud loss according to global respondents at 31% and U.S. respondents at 35%. In fact, in the U.S., this was more than double the next most common cause of fraud losses – synthetic identity fraud at 17%, TransUnion said.
“Protecting customers and their businesses from fraud is essential to enabling safe and tailored consumer experiences. These findings reveal that despite the good-faith efforts that are being undertaken by global organizations to identify and prevent fraud to date, fraudsters continue to evolve and it’s vital that fraud prevention methods keep up with the changing times,” said Steve Yin, global head of fraud at TransUnion. “Business that aren’t already doing so should ensure that they are taking advantage of fraud prevention technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection as critical components of their fraud prevention programs.”
According to insights from TransUnion’s global intelligence network, the global rate of suspected digital fraud remained stubbornly high in H1 2024 at 5.2% of all transactions. For transactions where the consumer was located in the U.S., 4.6% of digital transactions were suspected to be fraudulent over the period. Breaking it down by the industry, the highest rate of suspected digital fraud for transactions where the consumers were in the U.S. was the gaming sector, for which 13.3% of all transactions in that industry were suspected to be fraudulent in H1 2024, TransUnion said.
Synthetic Identity Lending Exposure Reaches New Record High
“Potentially driven in part by the wealth of stolen identities acquired via data breaches, accounts opened using synthetic identities continue to put lenders at risk. In fact, the increases among overall lender exposure to synthetic identities for U.S. auto loans, bank credit cards, retail credit cards and unsecured personal loans continued in H1 2024. TransUnion documented such exposure rising from $3 billion in H1 2023 to $3.2 billion in H1 2024, an all-time high and growth of 7% YoY. The share of accounts opened for the four tradelines by synthetic identities rose 18% YoY, also reaching an all-time high,” TransUnion said.
The auto loan industry continued to be the most impacted by lender exposure to synthetic identities among the four tradelines, accounting for $2 billion of the total in H1 2024, the fourth consecutive first half of the year in which auto has seen the greatest exposure, TransUnion said.