The Shifting Landscape of Digital Fraud: Why Mobile is the New Battleground

Highlights: 

• Mobile fraud is escalating rapidly (up 15% year over year since 2020), while desktop fraud is declining, making mobile the primary battleground for digital fraud attacks.

• Fraudsters target mobile channels due to the vast and growing user base, the convenience of the platform, and the often-vulnerable security posture of hastily developed mobile applications.

• Businesses should move beyond slow, manual fraud reviews by augmenting existing workflows with automated, data-driven fraud solutions. This approach enhances decisioning accuracy and speed, increases legitimate customer approvals, and reduces overall fraud losses.

Fraud is both disruptive and financially debilitating to consumers and businesses. Yet today, with the steady rise of mobile fraud, the stakes are only getting higher as fraudsters increasingly focus their attacks on mobile devices and transactions.  

Here, we examine why and how fraudsters are expanding their digital reach to target mobile transactions, and offer practical strategies that businesses can use to strengthen their mobile fraud controls, reduce fraud risk, and drive more seamless, secure digital experiences that power long-term growth.

A Superhighway of Engagement and Transactions 

Mobile device usage is ubiquitous in modern life. According to research compiled by consumeraffairs.com, nearly all Americans (more than 98 percent) own cell phones, primarily smartphones, and they’re spending a good chunk of their time on those phones—on average, 4 hours and 30 minutes every day.   

Many, 71 percent, use their smartphones for e-commerce/online shopping, while 60 percent use their phones for banking. In fact, mobile phone sales, known as m-commerce, are expected to surge from approximately $387 billion in 2022 to around $856 billion by 2027.  

It’s no wonder, given this superhighway of mobile engagement and transactions, that fraudsters are focusing on mobile channels. Apart from having a vast and growing audience of susceptible targets, they likely embrace mobile for many of the same reasons as consumers and businesses—its ease, speed, and convenience. 

Yet, there’s also another reason fraudsters opt for mobile. First, mobile devices and apps often store an immense amount of consumer data. Second, in the rush to develop and launch mobile apps, developers may neglect to incorporate adequate security protections, making mobile apps—and those who use them—more vulnerable to fraud. 

The Widening Scope of Mobile Fraud 

The proliferation of mobile apps, mobile payments, and other fintech innovations offer businesses and consumers more payment and transaction options than ever before; however, this also means that fraudsters have more opportunities to exploit these options. 

To better understand the widening scope of mobile fraud, Equifax recently analyzed approximately 65 billion transactions across 16,000 merchants between 2020 and 2023 to produce its Digital Fraud Trends Report. 

The resulting fraud insights are alarming, yet also actionable, as they give businesses current insight into shifting behaviors and trends to inform their go-forward strategies. 

• Since 2020, mobile fraud has increased 15 percent year over year, while fraud committed using desktop computers fell 5 percent year over year. 

• Mobile fraud jumped 44 percent between 2021 and 2022. 

• Mobile fraud losses increased by 52 percent in 2022, while desktop computer fraud losses dropped 16 percent. 

These numbers encompass the latest forms of fraud, including synthetic identity fraud, account takeover fraud, and other related scams—all of which can be easily perpetrated via today’s diverse and sophisticated mobile channels. 

How to Beat Mobile Fraud & Drive Secure Growth 

Merchants, banks, lenders, and other businesses typically have built-in fraud processes; however, depending on the company's size and available resources, these workflows may be outdated. Often, they’re heavily reliant upon manual reviews, which are slow and prone to errors. 

It’s not ideal for stopping fraudsters who strike in seconds, and they’re never seen again. It can also cause unnecessary friction that drives away good customers. Likewise, these processes—due to their manual nature—can hamper visibility and decisioning agility, leading to more declined transactions than necessary. 

Here’s a better strategy, one that can stop 17 percent more fraud than internal solutions at issuing banks. And it doesn’t involve “replacing” manual processes. Instead, augment existing workflows with automated, data-driven fraud solutions from a trusted partner to boost fraud protection across all areas of the business, especially digital interactions.   

Here’s what that might look like: 

• Decisioning accuracy improves since the foundation of data to verify identities, mobile devices, computers, payment accounts, and more is exponentially expanded to include diverse, differentiated data sources that can better identify what is and isn’t fraud. 

• Decisioning speed accelerates as today’s fraud solutions can automate a waterfall process that begins with instant checks and verifications. Manual reviews are only used to evaluate flagged identities and transactions. Otherwise, if an automated check “fails” or “passes” based on preset screening criteria, the transaction immediately proceeds without delay, with an “approved” or “declined” decision. 

• Approvals increase since modern fraud solutions employ a robust mix of multisource data (including powerful alternative data), automation, and predictive machine learning technology to more accurately and consistently authenticate real customers, businesses, and transactions, enabling an increased flow of approvals. 

• Fraud losses and costs are reduced since an existing process enhanced with tech-enabled fraud solutions strengthens and fortifies existing fraud controls and stops more fraud faster—before it enters the business or impacts customers—without requiring additional internal resources.  

• New fraud types can be shut down faster since fraud solutions are backed by trusted experts who bring a wealth of experience solving today’s toughest fraud challenges across all business channels and industries, and continually share the latest fraud trends and best practices. They can also tailor fraud solutions to meet precise business needs based on changing risk levels, company size, industry, and other factors. 

Looking ahead, businesses can’t afford to stand still. Successful fraud strategies must balance innovation across all digital channels (including mobile) with intelligent fraud prevention. For many, this means enhancing their existing fraud processes with automated, data-driven insights that move as fast as the threat landscape itself. By doing so, organizations can detect mobile fraud in real-time, protect their customers, and build trusted digital experiences that drive long-term growth and success. 
Discover more on recent fraud trends and learn about innovative fraud solutions that can help protect your business.