TransUnion Finds Financial Services Digital Fraud From Hong Kong Increased the Most

• Gen Z and Millennials report being targeted the most among generations

• Hong Kong’s suspected Digital Fraud rate remains 10% higher than global average

• Communities, retail and financial services are most targeted in Hong Kong among industries analysed

• With their frequent digital device use, Gen Z (51%) said they’re most targeted by fraud schemes while Millennials reported being most victimised

Research from the H2 2024 Update to the State of Omnichannel Fraud Report published by TransUnion (NYSE: TRU) finds that 5.7% of all attempted digital transactions where the consumer was in Hong Kong were suspected to be Digital Fraud in the first half of 2024 (H1 2024) [1]. This figure is 10% higher than the global average of 5.2%. The report analysis also revealed the ongoing challenges in combating fraud across industries.

Online forums and dating sites are top targets of suspected Digital Fraud in Hong Kong, mirroring global trends

In H1 2024 the communities industry, which includes web properties such as online forums and dating sites, recorded the highest suspected Digital Fraud rate among sectors analysed globally. It had the highest rate of suspected Digital Fraud in seven of the 19 countries and regions surveyed when the consumer is located in those areas during transaction, including Hong Kong. This sector faced a suspected Digital Fraud rate globally of 11.5%, while Hong Kong experienced an even higher rate of 15% in H1 2024. TransUnion's communities customers worldwide identified profile misrepresentation as the most common type of Digital Fraud they have encountered during this period.

Account creation posed the highest risk in the digital communities customer journey in Hong Kong. In fact, 29% of all attempted digital account creation transactions where the consumer was in Hong Kong were identified as suspected Digital Fraud in H1 2024, increasing 126% from H1 2023. This could be driven by bad actors using synthetic or stolen identities to open accounts. These findings align with recent reports from the Hong Kong police detailing over 500 fraudulent activities linked to fake compensated dating scams in H1 2024 involving losses of HK$243 million [2].

The retail sector reported the second highest suspected Digital Fraud attempt rate in Hong Kong at 9.5% followed by financial services at 5.5% in H1 2024. Financial services saw the largest YoY jump in the rate of suspected Digital Fraud from H1 2023 in Hong Kong among industries analysed at 29%. In the face of escalating concerns, Hong Kong’s central banking institution, the Hong Kong Monetary Authority (HKMA), is moving forward with its proposal to allow banks to share information to combat fraud with legislative amendments [3].

These initiatives are particularly important given the surge in financial losses YoY over the first six months of the year [4], echoing TransUnion’s findings that the volume of suspected Digital Fraud attempts coming from Hong Kong in financial services soared 78% from H1 2023 to H1 2024.

Communities had the highest rate of suspected Digital Fraud in H1 2024 and financial services reported the highest YoY rate increase in Hong Kong

Source: TransUnion TruValidate™

“Findings from our latest report reveal that fraudsters most often seek out targets on online communities such as forums, dating apps or messaging services globally,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Despite the good-faith efforts that are being undertaken by local authorities and institutions to identify and prevent fraud to date, consumers and businesses confront increasingly sophisticated cybercriminals who weaponise identity data at scale to execute fraud schemes. This highlights the pressing need for businesses to continuously enhance their capabilities to safeguard consumers from online deception across industries.”

More than half of Gen Z consumers in Hong Kong report having been targeted by fraud schemes

Suspected consumer fraud remains a concern, as highlighted in TransUnion’s Q3 2024 Hong Kong Consumer Pulse Study. This survey of 860 Hong Kong adults from 16-29 July uncovered that 39% of respondents reported being targeted by online, email, phone call and text messaging fraud attempts over the past three months, with 5% saying they fell victim.

Among generations [5] surveyed (Gen Z, Millennials, Gen X and Baby Boomers), Gen Z and Millennials said they were targeted the most. Specifically, 51% of Gen Z respondents reported being targeted in the last three months, a six-percentage point rise from the Q3 2023 Study. This higher percentage than other generations may be attributed to Gen Z's frequent engagement with digital devices, which makes them particularly vulnerable to being targeted. Meanwhile, 41% of Millennials reported being targeted with fraud and had the highest rate across generations of those who said they fell victim at 7%.

Among all generations, of those reporting being targeted vishing (fraudulent phone calls meant to trick consumers into revealing data) was the most common scheme at 36%, followed closely by phishing (fraudulent emails, websites, social posts, QR codes, etc. aimed at stealing data) at 33%.

“While Digital Fraud may fluctuate, the prevailing trends in data breaches and scams have an unmistakable impact on consumers. Despite Gen Z and Millennials being particularly vulnerable demographics in the digital era, all consumers rely heavily on businesses to ensure that they enjoy a secure digital experience,” added Ying. “It is therefore imperative for businesses across industries to employ a strategy of continuous innovation and friction-right fraud prevention through technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection that will all be conducive to enhancing consumer trust and deliver better business results."

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions it assessed for fraud.

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Remarks

Download the TransUnion H2 2024 Update to the State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report include Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia.

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[1] The first half of the year or H1 refers to January 1 to June 30

[2] Hong Kong Police: Online romance scams

[3] HKMA: Conclusions of the Public Consultation on a Proposal for Information Sharing among Authorized Institutions to Aid in Prevention or Detection of Crime

[4] HK Government Press Release: Police Anti-Deception Coordination Centre launches Anti-Scam Month campaign

[5] Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.