Average Number of Suspected Digital Shopping Fraud Attempts in Kenya During Black Friday Period Up 9.5% Compared to Same Period in 2022

TransUnion (NYSE: TRU) released new findings today highlighting e-commerce fraud that occurred during the start of the 2023 holiday shopping season, from the Thursday before Black Friday to Cyber Monday. Based on proprietary insights from TransUnion’s global device risk consortium, the average number of suspected digital fraud attempts on any given day during that holiday period where the consumer was located in Kenya during the transaction was 9.5% more than the same period in 2022. However, it was2.8% lower than the rest of 2023 (1 January to 22 November). Where the consumer transacts from Kenya, 10.3% of e-commerce transactions during that period were suspected to be fraudulent compared to 9.3% the rest of the year.

Globally, the analysis found 3.6% of all e-commerce transactions over the Black Friday period (23 – 27 November 2023) were suspected to be fraudulent. TransUnion also determined that the average number of suspected digital fraud attempts on any given day during that period globally was 15% higher than the same period in 2022, yet 50% lower than during the rest of 2023. ^[1]

The Percentage of Suspected E-Commerce Fraud at the Beginning of the Festive Shopping Season, Compared to the Rest of the Year

* ^{Includes Nov. 11 for Hong Kong}

“Just as the holiday season drives consumers online to begin shopping for gifts for their loved ones, so does it become a destination for fraudsters seeking to take advantage of this time for their financial gain,” said Steve Yin, global head of fraud at TransUnion. “Online retailers must ensure that consumers shopping their sites for the best deals are at the same time protected from fraud in the most seamless and friction-right way possible.”

The study also revealed the suspected digital fraud rate for each day in the holiday shopping period for transactions where the consumer was in Kenya during the transaction and globally. Unlike last year when Black Friday (25 November 2022) saw the highest suspected digital fraud rate, this rate was the highest on Cyber Monday, 27 November.

The Suspected Digital Fraud Rate Varies for Each Day of the 2023 Holiday Shopping Weekend

As part of this analysis, TransUnion also determined the top indicators of fraudulent e-commerce transactions during the holiday shopping season globally. This year, transactions per IP (triggered with an unusual volume of activity from a single Internet Protocol (IP) address to a customer’s site in a short time) and transactions per device (triggered with an unusual volume of activity from a single device to a customer’s site in a short time) were the leading indicators for potential fraud attempts.

“Anecdotally, we hear that payment card issuers tend to use a different model during holiday shopping periods to allow more authorisations to complete quickly,” said Morris Maina, CEO at TransUnion Kenya.  “It seems that a similar tactic is being used by retailers concerned that any friction may drive consumers away, reflecting the elevated competition and aggressiveness of retailers to ensure greater shopping volume.”

 Criminals exploit the lowered drawbridge

Criminal organisations look forward to this period of lax fraud controls. Knowing that guards are lowered, they commit account takeovers to empty loyalty points programs and make purchases using the hijacked customer’s existing payment wallet, for example. For retailers that allow guest checkouts, fraudsters will transact using stolen payment cards they’ve purchased from the dark web or have previously harvested from other data breach attacks.

While online sales numbers for retailers are now known, retailers will have to wait and hope that fraud losses do not pile up. The challenge is that they won’t know for some time; merchants will have to wait for an uptick in chargebacks, returns, and customer disputes before that becomes clear.

“The upcoming holidays mark the biggest shopping season of the year for retailers, but equipping themselves with the proper tools to detect fraud at the first warning sign is a year-round priority,” said Maina. “A critical way to minimise fraudulent transactions while at the same time protecting legitimate ones involves implementing holistic fraud solutions that can verify customer identity and authenticity at the very beginning of a transaction, including both account creation and login.”

TransUnion came to its conclusions primarily based on intelligence from its identity and fraud product suite, TransUnion TruValidate™, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process—compared to all transactions it assessed for fraud.

To find out how this data varies by select countries and more, TransUnion’s holiday fraud insights can be found here.

Consumers interested in obtaining their TransUnion credit report can download the TransUnion Nipashe app.

^[1] For Hong Kong, all holiday analysis also includes Nov. 11