COVID-19 Is Changing Fraudster Behavior. How Is Your Industry Being Impacted?

People are staying home, and the economy is slowing, but that isn’t stopping the fraudsters. They’re just adapting.

While the rest of the world takes a break in the wake of the COVID-19 outbreak — avoiding travel, skipping shopping, passing on events, staying home from jobs, and more — bad actors are still at work. It’s almost as if nothing has changed. And yet, it has.

The figure below shows the median fraud rate across global online services over the last three months. It appears reasonably stable, hovering a bit above 0.02. At first glance, it seems like business as usual for the fraudsters.

However, when we break down the data by the online service vertical, a different picture starts to emerge:

Fraud on Social Platforms

While fraud on financial platforms appears relatively unchanged (dark blue line), we can see a significant uptick on social platforms, especially during February, when the coronavirus outbreak first began to attract peak media attention. This burst of activity follows a typical post-holiday dip and is uncharacteristic for this time of year. As we reported recently in our This Week In Fraud Trends series, new phishing scams are emerging every day that are trying to leverage the crisis to lure unsuspecting victims into providing personal information, purchasing fake products, and more. Social platforms have been a hotbed of this kind of activity.

Fraud on Marketplace and E-commerce Sites

We also see increases in fraudulent activity on marketplace and e-commerce sites (orange line). Fraud rates on these platforms have increased 12% since the start of the holiday season, and instead of heading south in the aftermath of the holidays, the lift is continuing, suggesting that fraudsters see, in the outbreak, an opportunity for continued illicit gains.

Fraud in the Travel Industry

Perhaps the most obviously affected sector is the travel industry (light blue line). We observe that the fraud rate has increased 4.5x times between the end of the holiday season (0.8%) and mid-February (3.6%). Again, this correlates to when the coronavirus outbreak began to attract peak media attention, and we can explain the increase by noting that, as legitimate travelers stay home in greater numbers, those continuing to book travel on online platforms are increasingly likely to be fraudsters.

Fraud in the Mobile Gaming Sector

It is interesting to note that in the mobile gaming sector (green line), the percentage of fraudulent activity appears to be on the decline. At face value, this might suggest fewer fraudsters committing fewer fraudulent acts. This is where contextual analysis is critical, as the reality is a bit different. The likely reason for the seeming decline is really just a changing ratio — as people are staying at home, online entertainment platforms are getting used more often. So, more organic users means less fraud overall, as legitimate users increasingly outnumber the bad actors.

Conclusion

The COVID-19 crisis is having an almost incalculable impact across the globe, and we’re still only just starting to understand the potential scope. Exploitive fraudulent activity is one of the many critical concerns we’ll need to urgently address on an ongoing basis. As can be seen from our data, fraudster activity is evolving and adapting, but it’s not slowing down. It’s especially important to understand that, when it comes to fraud attacks, different industries and sectors are being impacted in different ways, and that there is no one-size-fits-all response.

By embracing approaches that enable constant monitoring and comprehensive coverage, businesses can stay ahead of adaptive fraudsters who will try and exploit any situation to their advantage. While uncertainty continues to reign as the world struggles valiantly to contain the spread of COVID-19, there are nonetheless data-informed measures we can take to ensure that fraudsters do not gain the upper hand during these worrisome times. Understanding how fraud is affecting different economic sectors represents a positive step towards securing the safety of the businesses and customers in each of these impacted industries.