New Account Fraud Surges 28% in the UK as Global Rates Drop
New account fraud surged by 28% year-on-year in the UK as global rates fell by nearly the same amount, according to new data from Jumio.
The online verification firm analyzed tens of millions of global transactions over the past year up to November, to compile its annual Holiday Fraud Report.
It revealed that while the global average for new account fraud rates dropped 23% year-on-year, it increased by over a quarter in the UK. The country has the second-highest fraud levels in Europe after Spain, which recorded a 25% increase in ID-based fraud in 2020.
The report recorded attempts to bypass fraud checks using both government-issued IDs and selfies. Fraud rates in the UK based on ID documents almost doubled from 2017 levels, and fraud levels in November were a third higher than those from January to October in 2020, it revealed.
Jumio claimed the relatively high rates of fraud in the UK could be attributed to the large number of financial services customers based there.
The industry is by far the most affected by fraud of any surveyed globally, although it did manage to record a drop in rates from 2019. However, in the UK it was the online gaming and cryptocurrency verticals that had the highest levels of new account fraud during the year; an indication of ongoing money laundering activity, Jumio claimed.
Interestingly, the global drop in new account fraud came during a year in which many experts have been claiming fraud rates have risen.
“One possible explanation is that more legitimate customers were opening accounts through online channels instead of in person, so the percentage of bad actors in the total transactions we processed dropped as a result,” the report noted.
“Another possibility is that fraudsters redirected their efforts to easier targets where security was more lax and they did not have to divulge personal information about themselves, such as providing a selfie, which is self-incriminating.”
The firm argued that by adding selfie-based authentication to government ID uploads, organizations have the best chance of weeding out scammers. It claimed to have seen 80% less fraud using this method compared to customers who only require a government-issued ID.