Digital Fraud Attempts from Canada Surge by 11%, Gambling Sector Most Affected

A recent analysis by TransUnion reveals that suspected digital fraud attempts originating from Canada have seen a sharp rise, with gambling emerging as the most impacted industry. In the first half of 2024 (H1), 5.7% of all attempted digital transactions from Canada involved suspected fraud, marking an 11% year-over-year increase compared to H1 2023. This rise occurred despite the volume of overall transactions increasing by less than 1% over the same period, highlighting an intensifying issue of fraud within specific sectors.

Gambling, including online sports betting and poker, has been identified as the Canadian industry most susceptible to digital fraud, with a staggering 9.6% of transactions suspected to involve fraud. This rate places the gambling sector ahead of both retail (9.2%) and government services (7.7%) in terms of exposure to fraudulent activity. The increase in gambling-related fraud is particularly notable, surging by 79.3% compared to the previous year, making it the second-largest increase among Canadian industries.

The Canadian gambling sector’s vulnerability to fraud is also significantly higher than the global average for the industry. Across 19 markets studied by TransUnion, the global average for suspected gambling-related fraud stood at 7.2%, with some regions experiencing a decline in fraud attempts. However, Canada’s situation remains concerning as its gambling sector’s fraud rate exceeds the global average by more than two percentage points. This increase has drawn attention from industry leaders and regulatory bodies, who are calling for urgent measures to protect consumers and businesses from evolving fraudulent schemes.

The rise in digital fraud is not only affecting consumers but also putting a considerable strain on businesses. According to a TransUnion survey of 200 Canadian business leaders, companies lost approximately 6% of their revenue—equating to around $78 billion—due to fraud in the past year. Among the most common types of fraud reported were scam or authorized fraud (31%), account takeovers (19%), and synthetic identity fraud (18%).

Businesses in the gambling sector, in particular, are facing increasing operational costs as they invest in fraud prevention technologies. Patrick Boudreau, Head of Identity Management and Fraud Solutions at TransUnion Canada, emphasized the need for companies to adopt advanced fraud prevention tools, such as identity verification, IP intelligence, and synthetic identity detection, to combat these rising threats. Boudreau warned that fraudsters are continuously evolving their tactics, and businesses must keep up to prevent further losses.

In response to the growing threat, Canadian businesses are urged to take stronger measures against digital fraud. The findings from TransUnion suggest that while companies are making good-faith efforts to protect their operations, fraudsters are becoming more sophisticated in their methods. Boudreau highlighted the importance of integrating new fraud prevention technologies into existing security frameworks to enhance protection and mitigate risks for both consumers and businesses.

Fraud prevention in the gambling industry has become particularly urgent as the sector continues to experience disproportionate levels of fraud attempts. Despite ongoing regulatory efforts and the implementation of security measures, the rise in gambling-related fraud remains a challenge. TransUnion’s report indicates that Canadian gambling companies must prioritize safeguarding methods to prevent further damage, including enhancing consumer verification processes and adopting advanced fraud detection technologies.

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While Canada faces increasing challenges with digital fraud in gambling, the situation is not unique to the country. In the U.S., for example, the rate of suspected fraud in the gambling sector is even higher, reaching 13.3%. This suggests that while Canada’s numbers are concerning, other markets are also grappling with similar issues. However, Canada’s significant year-over-year increase in gambling-related fraud underscores the need for urgent action.

As fraud prevention technologies continue to evolve, Canadian businesses will need to stay ahead of these changes to ensure safe and secure digital transactions. With industries like gambling and retail particularly at risk, companies must adapt quickly to protect themselves and their consumers from escalating fraud attempts.

Source:

, lcb.org, October 16, 2024.