Featurespace, the enabler of enterprise-grade fraud and financial crime technology, today announces the data findings of a new report: The State of Fraud and Financial Crime in North America Annual Report 2023.
The research, developed in conjunction with GlobalData, shows “that overall North American fraud rates in 2023 – which includes both successful and unsuccessful incidents of fraud and financial crime – increased by 70%, compared to 59% in 2022, as reported by respondents.”
Martina King, CEO, Featurespace, says:
“These findings emphasize the need for continued vigilance. The fact that fraud is considered commonplace points to the real challenges in our sector. We need to build a future together where the fraudsters are two steps behind the financial institutions – instead of two steps ahead.”
Focusing on payment methods
Financial Institutions were asked in both 2022 and 2023 “whether they had observed an increase in fraud rates across a range of twenty different payment methods.”
This included traditional methods, “such as credit cards, and newer ones, such as digital wallet payments.”
The latest results show several striking “changes in payment methods which have attracted the greatest level of growth in fraud-related activity.”
Credit cards continue to top the list “with the 64% of respondents reporting growth in fraud rates in 2022, increasing to 85% in 2023, an uplift of 22-percentage points.”
Check payment fraud, which saw “a 38% increase in 2022, has now skyrocketed to a remarkable 70% in North America in 2023.”
This represents a substantial 32-percentage point increase, “positioning it as the second-highest growing method year-on-year, second only to credit cards. Indeed, the share of fraudulent transactions tied to physical forgery fraud or counterfeit activity has doubled, now comprising 14%. This is likely an outcome of fraud associated with check payments, as checks continue to be widely used by genuine customers and fraudsters.”
In contrast, digital wallets, for which 58% of FIs “reported an increase in fraud in 2022, has decreased to 22% in the most recent survey.”
Notably, the percentage of FIs reporting “increased fraud rates for Apple Pay, PayPal and Google Pay has also decreased quite steeply – although in each case this growth remains in double digits.”
Finally, two of the largest changes between “the 2022 and 2023 surveys relate to PayPal owned digital wallet Venmo, and BNPL payments. Both dropped from over 30% in 2022 to 5% or less in 2023.”
About The State of Fraud and Financial Crime in North America Annual Report 2023
The findings of The State of Fraud and Financial Crime in North America Annual Report 2023 are based on “a B2B study conducted by GlobalData from June-August 2023. The FIs that participated in the most recent survey represent a broad range of organizations from across North America that offer a variety of transactional solutions to both retail and business customers.”
This new research is based on telephone interviews “conducted with 200 individuals responsible for fraud and financial crime within various FIs, predominantly from the USA (90%) and Canada (10%).”
Job titles of those participating were self-described, “with nearly 80% working in fraud roles spanning various levels of seniority.”
The remaining participants held roles more broadly “associated with risk and security.”
