Growth in Mobile Fraud Far Outpaces Growth in M-Commerce, TransUnion Study Finds

With 78% of e-commerce transactions in 2019 coming from mobile devices, retailers have good reason to invest in their mobile-shopping experiences. Doing so, however, is not without risk, says credit-reporting agency TransUnion in its Global E-Commerce in 2020 report released Tuesday.

The report is based on approximately 10 billion transactions Chicago-based TransUnion and its affiliate companies analyzed for fraud indicators in 2019. The data says mobile-commerce transactions increased 32% in 2019 versus 2018. But just as consumers and merchants paid more attention to m-commerce, so too did criminals. TransUnion measured a 118% increase in potential fraud from mobile devices last year.

Actual fraud—specifically account takeovers and shipping fraud—skyrocketed. TransUnion said there was a 347% increase in account-takeover fraud. That’s when criminals gain access to accounts using credential stuffing, social engineering, phishing, or hacking tactics.

“Customer accounts are loaded with valuable personal information,” the report says. “They are a prime target for criminals, who use sophisticated tactics to break in, steal credit cards and make fraudulent purchases from these accounts. Retailers should consider adopting continuous risk-assessment models as a means of protecting customer identities and transactions.”

The spike in shipping fraud was even greater—up 391%. In this type of fraud, a criminal using a fraudulently taken-over account will order a product without changing the shipping address at the time of purchase in order to avoid detection. Once the package is shipped but before delivery, the criminal reports a change in shipping address.

“The growth in e-commerce has led to a dramatic increase in shipping fraud, with more fraud rings accessing customer accounts and email accounts to track and redirect in-transit shipments before delivery,” the report says. 

One type of fraud—promotion abuse—actually decreased 42% in 2019. TransUnion suggests this type of fraud, when criminals access accounts to empty them of benefits or to create new accounts to exploit promotion, most likely fell because criminals turned to more lucrative schemes.

“As retailers invest in mobile experiences, criminals are taking note and attempting to mimic common consumer behavior,” the report says.