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Hong Kong businesses reported HK$92 billion (US$11.84 billion) in financial losses from digital fraud over the past year, despite the city’s overall digital fraud rate being lower than the global average, according to a new report by credit reference agency TransUnion. Conducted from late May to early June, the survey gathered data from 1,200 respondents worldwide, including 200 in Hong Kong, all in managerial roles overseeing risk and business fraud. In Hong Kong, only companies with an annual revenue of at least HK$200 million were polled. Globally, the survey – which also included businesses in Canada, India, the Philippines, the UK and the US – showed a rise in fraud losses to 7.7 per cent of annual revenue from 6.5 per cent a year earlier. While only 2.7 per cent of all attempted digital transactions in Hong Kong were suspected to be digital fraud, compared with 3.8 per cent globally, businesses that fell victim to fraud reported losses equivalent to 7.1 per cent of annual revenue. More than half of the Hong Kong respondents were “extremely” or “very” concerned about the business impact of fraud. The main cause of reported fraudulent cases was third-party fraud, which involves using stolen identities to open accounts and accounted for 26 per cent of reported cases in the city. Other causes were account takeovers – where criminals gain control of an existing account – and scams – which are designed to trick individuals into surrendering something of value. They made up 22 per cent and 18 per cent of reported cases, respectively. Identity theft and unauthorised access were major threats in Hong Kong, according to TransUnion. Account login attempts comprised nearly 11 per cent of suspected digital fraud transactions in the city, twice as high as the global average. The spike was potentially driven by phishing and credential theft, the report said. The findings also revealed a shift in fraudsters’ preferred targets in Hong Kong. The retail sector saw a 155 per cent increase in suspected digital fraud from a year earlier, the highest among industries analysed. Telecommunications and logistics also saw significant increases, rising by 128 per cent and 117 per cent, respectively. In contrast, internet communities – such as online forums and dating sites – and financial services saw decreases of 62 per cent and 21 per cent, respectively. Despite the rising threats, Hong Kong’s business sector is investing heavily in defences. The city recorded the highest percentage of business leaders deploying fraud operations involving more than 20 analysts, according to the survey. Twenty-one per cent of businesses reported optimising their fraud detection models monthly, while 75 per cent did so quarterly. Devon Sin, chief product officer at TransUnion Asia-Pacific, described the progress Hong Kong was making in combating fraud as “encouraging”. “To maintain vigilance, businesses must tailor their fraud strategies to local realities, striking the right balance across technology, processes and awareness to stay ahead of complex threats,” Sin said. “At the same time, individuals should proactively safeguard and monitor their personal information through trusted tools to reduce vulnerability and stay ahead of evolving risks.” Despite the growing sophistication of schemes like identity fraud and phone-related scams, TransUnion’s data showed that businesses and consumers were aware of those evolving threats, Sin added.
