Fraud Rates: What Are They and Why Are They Growing?

Fraud rates are on the rise. The US Federal Trade Commission (FTC) reports that fraud losses rose by 70% between 2020 and 2021, and by a further 30% in 2022, reaching an eye-watering $8.8 billion. That uptick is largely due to the increase in online payments for an increasing number of goods and services.

The best solution is to check your customers’ details with the right software and gauge which factors and types of fraud are driving your organization’s rising fraud rate.

Let’s look into what fraud rates are and how SEON can help reduce them.

What Are Fraud Rates?

Fraud rates are the proportion of an entity’s transactions or claims that are fraudulent. They are expressed as either a percentage or a ratio. If you have, say, 100 transactions and five of them are fraudulent, the percentile fraud rate is 5%, and the fraud ratio is 5:100.

Fraud rates usually refer to business transactions, but they can also apply to any other contexts that involve transactions and other exchanges, such as insurance companies. For instance, if an insurance company files a total of 100 insurance claims and 10 of them are made by fraudulent policyholders, then that company’s insurance fraud rate is 10%.

Fraud rates don’t just have to refer to the total instances of fraud within an entity’s given number of transactions or claims: They are often expressed within a certain period of time, such as on a monthly basis.

Fraud rates are highly useful in fighting fraud. Internally, they can help companies determine the risk factors when onboarding partner organizations and customers or generally keeping good in-house risk hygiene – a climbing fraud rate means your fraud detection and prevention workflows need inspecting. For fraud analysts and investigators, fraud rates can inform the process of detecting anomalous transactions and predicting future fraud attacks.

Why Are Fraud Rates Increasing?

Fraud rates have risen in the wake of modern technological advances, remote working, online communications, and – tying those factors together – the increased reliance on digital channels, such as ecommerce platforms and fintech applications.

The digital age is a double-edged sword: While it brings efficiency and convenience to transactions, its remote and online nature also means it’s a landscape that fraudsters can exploit through identity theft, phishing, and other remote attacks.

The FTC reports that imposter scams and online shopping scams were the top causes of fraud in 2022. This follows the rise in online shopping and other internet transactions that was linked to the many countries entering COVID lockdowns during 2020 and 2021.

Times of economic downturn also tend to produce rising fraud rates, as people increasingly seek alternative streams of income, even illicit ones. Ultimately, cybercrime, and therefore online fraud attack rates, are increasing because people have become more and more influenced by the implications of post-lockdown remote working and the macroeconomic climate itself.

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There has been an upward trend in fraud rates over the last year, and we are still seeing an increase right now.

For example, 51% of organizations surveyed by PwC reported having experienced fraud in the last two years. PwC states that this was the highest level of fraud that it experienced in the 20 years of its research.

This increase in fraud rates is being seen across the world. The US Federal Trade Commission (FTC) saw $5.8 billion lost to fraud in 2021, which was 70% more than the fraud losses observed in 2020 (around $3.3 billion, according to the FTC’s Consumer Advice page).

In the UK and Wales, the ONS has reported that, when compared with the year ending March 2020, fraud offenses rose by 25% in the year ending 31 March 2022, with 4.5 million fraud attacks reported. Such a rise was particularly attributed to large increases in advance fee fraud and consumer and retail fraud.

How SEON Can Help Fight Growing Fraud Rates

To help fight growing fraud rates, you have to fight fraud! Thankfully, fighting fraud is SEON’s modus operandi: The software analyzes transactions and other user activity and enriches submitted data points to find signs of suspicious or anomalous behavior.

SEON helps fight growing fraud rates using its powerful fraud detection software. It also helps produce a more accurate picture of fraud rates themselves. In doing so, it offers businesses a better understanding of how to combat upward fraud rate trends. After all, each transaction check, user ID check, IP analysis check, and so on, that you process using SEON’s software ends up on its Transaction Monitoring panel.

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It’s on this panel that you can find every single user on your system who has had their transactions viewed and been flagged as suspicious. Information such as this is essential to determining the nature of fraud rate trends and fraudulent patterns that may emerge throughout businesses’ user bases.

Put simply, SEON’s transaction monitoring allows you to develop a thorough understanding of your fraud pain points with full transparency and customizability. After all, you have to know what your fraud rates are and what is causing them to rise before you can know how best to best fight them.

On top of this, SEON has a multitude of features that aid its fraud investigation capabilities. The software can help users scrutinize their customers’ identities by cross-checking account details with their other online profiles. This means that organizations can help determine whether they’re dealing with customers who are who they say they are, through such approaches as device fingerprinting and browser hash checks.

You can take a look at the below animation for a better view of how SEON can help.

As the animation shows, potentially risky users can be manually reviewed with a great deal of transparency. When a user’s risk score pushes them above the risk thresholds you set, SEON will let you run a name check that can yield online profiles connected to that person’s social media presence for review.

It is profile checks such as these that help organizations develop confidence in their users’ identities. When collecting personally identifiable information (PII), being able to filter out the bad actors leveraging fraud tools like synthetic IDs and stolen login credentials is crucial to keeping your fraud rates low.

To reduce your fraud rates, you have to know your fraud rates – and SEON puts that data at your fingertips!


What Are the Largest Fraud Threats?

Because the fraud landscape is forever changing, it is impossible to ascertain what the largest frauds are, though phishing and cybercrime are likely at the top of the list. Phishing involves tricking people into exposing their information or money; cybercrime involves outright attacking computer systems for illicit gain.

How Big Is Fraud in the USA?

Fraud is especially big in the USA: According to the Federal Trade Commission (FTC), consumers reported 2.4 million reports of fraud in 2022, and the money lost to fraud has increased by over 30% since 2021 – leading to $8.8 billion in losses in 2022. Researchers maintain that such damages are largely down to the rise in online shopping, especially following the increased interest in ecommerce following the COVID lockdowns of 2020.

Fraud Detection & Prevention: How to Do It, Types and Solutions


Office for National Statistics (ONS): Nature of fraud and computer misuse in England and Wales: year ending March 2022

Federal Trade Commission Consumer Advice: The top frauds of 2020

Federal Trade Commission (FTC): New Data Shows FTC Received 2.8 Million Fraud Reports from Consumers in 2021

New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022

PwC: PwC’s Global Economic Crime and Fraud Survey 2022

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Author avatar
Jimmy Fong

Jimmy Fong is the Chief Commercial Officer of SEON. His expertise in payments saw him supervise the acquisitions of companies by Ingenico, Visa and American Express. Jimmy’s enthusiasm for transparent sales and Product-Led-Growth companies drives SEON’s global expansion strategy, and he interviews both fraud managers and darknet fraudsters in our podcast to stay on top of the latest risk trends. Yes, it’s also him wearing the bear suit on our YouTube channel.

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