Financial Crime World

Botswana Hit by Surge in Online Fraud, Financial Services Most Affected

A recent study by TransUnion has revealed a significant increase in online fraud in Botswana, with financial services being the most affected industry.

Alarming Increase in Suspected Digital Fraud

The study found that the rate of suspected digital fraud attempts for financial services transactions where the consumer was in Botswana when transacting increased by 196% year-over-year to 9.7% in 2023. This is not only the highest suspected digital fraud rate in 2023 but also the highest year-over-year growth rate among industries analyzed.

Industry-wise Breakdown

  • Financial services: 9.7%
  • Retail: 8.7% (globally)
  • Online gaming: 6.4%
  • Other industries: 5.1%

The study revealed that 3.0% of all transactions where the consumer was in Botswana were flagged as being suspected digital fraud, an 85% increase from the previous year.

Tactics Used by Fraudsters

Fraudsters are increasingly using a tactic known as “early-phase new account digital fraud,” where they create new accounts using fabricated or stolen identities. This approach allows them to gain control over the accounts and compromise existing ones. The study found that nearly one in seven newly created accounts globally were suspected to be created via digital fraud.

Country-specific Insights

  • Botswana: Highest percentage of suspected digital fraud occurred during the account login process, with a rate of 13.0%.
  • Online gaming continued to see high rates of suspected digital fraud in the country.
  • The volume of risky transactions increased by 14% year-over-year and 105% from 2019 to 2023, outpacing the growth in digital transactions.
  • Retail surpassed gaming as the industry with the highest rate of suspected digital fraud globally in 2023.

Analysis and Recommendations

Kabelo Ramaselwana, CEO at TransUnion Botswana, attributes this surge in online fraud to the increasing use of credentials stolen in data breaches, making it easier for fraudsters to perpetuate attacks. He also notes that the tactics deployed by fraudsters are evolving, with a shift towards creating new accounts rather than compromising existing ones.

Conclusion

The study highlights the importance of staying vigilant against online fraud and the need for robust identity verification processes to secure trust across channels and deliver efficient consumer experiences.