Fraud in the Covid Age

Since the beginning of March 2020, when the world moved to multiple lockdowns and restricted activity as a result of the ongoing pandemic, it’s been clear that there has been a real shift in how we transact. It’s a subject I’ve covered in previous blogs, but as we come to the end of 2021, and payment data continues to be published for 2020, we are starting to see also the impact on fraud levels.

As always, data is difficult to quantify; as there are a limited number of organisations globally that publish fraud statistics on a regular basis. However, using data from the Consumer Sentinel Databook in the US, SABRIC in South Africa, UK Payments in the UK, and the Australian Payments network; we can get a clearer view on some significant global markets.

First, across all 4 geographies card fraud is down with the exception of Australia. In the UK, Card Fraud is down 7% on 2019 figures (a similar fall to 2019 where there was 8% reduction in fraud compared to 2018). The same is true when you look at the US, with credit card fraud values down a hugely significant 66% on 2019. South Africa shows a similar trend to the UK, with a 7% fall on 2019 card fraud values. Australia is the only region in this group of data that bucks the trend, with a 13% increase in Fraud.

The main driver for the reduction in the UK appears to be the reduction in Card Not Present fraud. In terms of Value lost, The UKs level of CNP reduced by 4%, which while small as a percentage value equates to a £17.6m reduction. South Africa meanwhile has seen their reduction in fraud driven by an 85% drop in Application fraud, with a drop from R177.7m to R25.8m; as well as an R21m drop in Counterfeit fraud. In fact, the UK, Australia, and South Africa have seen significant reductions in the level of Counterfeit Fraud, mainly due to cardholders not transacting at point of sale or at ATMs.

So, a reduction in Card fraud is understandable in the circumstances; as the pandemic has affected our global economies spending would have reduced in some parts of society, particularly at point of sale during multiple lockdowns as consumers look to manage their spending habits.

But this only tells part of the story; as when we then examine payment fraud trends, there is a marked difference in the level fraud seen. Authorised Push Payment Fraud is on the rise and a constant topic in the media.

In the UK, Authorised Payment fraud totalled £480m in 2020, a value that is only 17% less that the value lost to Card Fraud (£574m). Driven by Investment Scams, Romance Scams and Advanced Fee Scams, the issue has always been that ultimately the customer authorises the transactions. The payments are mainly made via the Faster Payments service, an instant payment.

And in the US, while the values are going down compared to other markets – the primary channels that are targeted in payment fraud are common to those most prevalent in the UK and Australia.

In my next blog, we’ll take a closer look at Authorised Push Payment Fraud in the UK, Australia, and the US.