Jumio has released its annual Holiday New Account Fraud Report, finding that new account fraud has doubled in the years since 2014, and increased 27.8 percent over 2018 alone. Fraud rates were generally higher in emerging markets than they were in more developed areas.
For the purposes of the report, new account fraud occurs when someone uses a falsified or stolen ID to open an online account for malicious purposes. A fraudster could use the account to launder money, or it could simply be used to make a large number of holiday purchases.
Regardless of the intent, new account fraud has spiked internationally in recent years. The Asia-Pacific region had the highest rates of fraud. The U.S. had the lowest, though the rate is still higher today than it was in 2014.
“It’s getting more difficult for modern enterprises to distinguish between high-risk from low-risk users — and this is only going to accelerate thanks to large-scale data breaches,” said Jumio Chief Product Officer Philipp Pointner. “All too often, companies rely on traditional methods of identity verification which are not well equipped to detect sophisticated methods of new account fraud.”
Thankfully, the report did provide some cause for optimism. New account fraud during the Black Friday/Cyber Monday weekend was 19 percent lower than it was during the rest of 2019. Black Friday is typically one of the most active weekends for new account attacks.
It’s also worth noting that the UK had the lowest levels of new account fraud amongst developed countries, and the lowest year-over-year increase at only 14 percent. For comparison, the U.S. rate went up 34 percent, while Germany’s went up 81 percent.
Jumio credits the lower rates to the UK Gambling Commission’s stricter identity verification laws, which seem to have lowered the fraud rate in the country’s gaming industry and indicate that better ID practices are an effective countermeasure against online fraud. Jumio itself has previously provided ID verification services for the Novibet and Casumo gaming platforms.
The gaming industry had some of the highest fraud rates outside of the UK, while the sharing economy, travel, and entertainment had some of the lowest internationally. The UK was also the exception to the Black Friday trend, and exhibited higher fraud rates for the weekend than the rest of the world.