Study: HK market sees decline in digital fraud attempts in retail

The rate of suspected digital fraud attempts from Hong Kong in Q2 2022 has dropped significantly compared to the same period last year, with the largest decline in retail, gaming and communities, according to TransUnion's latest data.

TransUnion’s quarterly fraud analysis showed that the rate of suspected digital fraud attempts originating from Hong Kong declined 26% across almost all of the industries tracked except for the gambling (2%) and financial services sectors (2%), with the largest declines in gaming (-59%), communities (-48%), and retail (-46%). 

The analysis shows that the largest declines year-on-year (YoY) in the rate of suspected digital fraud of transactions originating from Hong Kong occurred in gaming (-59%) and communities followed by retail (-46%), and travel and leisure (-35%). Rates of decline in communities, retail, and travel and leisure are ahead of the global figures (-8%, -28% and -28%, respectively) whereas declines in gaming were slightly less severe than the global trend (-63.5%).

Looking at the longer-term trend, the rate of digital fraud for transactions originating in Hong Kong against online communities is up 124% in Q2 2022 compared to the same quarter two years ago. Although fraud in financial services showed a slight YoY increase in Q2 2022, rates are actually down 4% compared to two years ago.

“The focus across industry has been identifying more of the good transactions and allowing them to pass with less friction,” said Jerry Ying, chief product officer of TransUnion APAC. “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, organisations can dramatically reduce costs, increase revenue and improve the overall customer experience.”

“Over the past two years we’ve generally seen rates of digital fraud increase as consumers increased their use of digital channels. However, it’s good to see the digital fraud rate for transactions originating from Hong Kong decrease the last couple quarters which could show that businesses are taking effective preventive measures against digital fraud,” said Ying.

“We’ve known for a long time that fraudsters follow the money and target where it is being spent. With people staying at home more during the pandemic, illegal online gambling helped fill the entertainment void for many consumers, which is particularly prone to fraudsters’ attention and has been a consistent tendency. At the same time, another pandemic trend has been consumers being more conscious about savings, investments and household finances. The data shows that these sectors remain a target for fraudsters,” Ying added.

Back in May this year, TransUnion’s analysis has observed a 26.5% decrease in suspected digital fraud rate for transactions originating from Hong Kong, compared to the same quarter last year. Under TransUnion’s analysis, some of the suspected digital fraudsters in Hong Kong shifting their target industries, the suspected fraud rate year-over-year (YoY) originating in Hong Kong declined in industries such as logistics, financial services and communities while fraudsters significantly increased their scams in sectors such as retail, gambling and travel & leisure.

According to the company’s recent survey, consumers claimed they were targeted more with digital fraud from November 2021 to February 2022. Among 1,088 Hong Kong adults surveyed, 39% said they had been targeted by digital fraud in the last three months, up six percentage points from the previous quarter. Of those consumers who said they had been targeted, they reported phishing scams most (35%) followed by identity theft and money/gift card scams (27% respectively).

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