Attempted credit card fraud up nearly 33% in Brazil in first half of the year – study

RIO DE JANEIRO, BRAZIL – Brazil experienced a 32.7% increase in attempted e-commerce fraud in the first half of 2021 compared to the same period last year, as shown in the Mapa da Fraude (Fraud Map) study conducted by Clearsale consultancy.

The study found 2.6 million attempts in the first six months this year, considering approximately 182 million credit card transactions.

“E-commerce is the highlight of these fraud attempts, a means by which criminals were more actively engaged after most people went into social isolation and began to make more purchases online,” explained Clearsale’s director of marketing and solutions Omar Jarouche.

In terms of values, an increase was also observed: in the first six months of 2021 there was a 39.5% rise in the amounts that suffered fraud attempts. Average transaction values have not been disclosed.

Good orders (which did not suffer any type of fraud attempt) rose 22.5%, lower than fraud attempts. “The growth of e-commerce, with more people buying and spending more on each order, is directly related to the growth of fraud attempts,” Jarouche says.

Cell phones remain the most defrauded product category, accounting for 5.1% of fraud attempts, followed by electronic products (4.9%) and games (4.2%).

“Cell phones have a very high net value in the secondary market and can easily be resold to make a quick profit. This is why it usually leads the list of products with the most fraud attempts,” Jarouche explains.

Most common types of fraud

The study also identified the three most common types of fraud in Brazil. They are effective fraud, friendly fraud, and self-fraud.

In the first case, the fraudster makes a purchase in an online store and uses stolen credit card data from other consumers when paying. Since the data is genuine, this is known as “clean fraud.”

The second type of fraud is when someone close to the cardholder, such as a child, for instance, uses the card’s data without the owner’s consent. Unaware that this occurred, the cardholder does not recognize the purchase and asks for a chargeback.

Finally, self-fraud refers to a purchase made by the fraudster. The cardholder makes the purchase with his or her own card and upon receiving the product or service, contacts the card administrator to contest the invoice entry as if he or she did not recognize the debt. The study did not list the order by number of frauds.

Fraud in telecommunications and finance

The survey also provided data on fraud in other segments. Over 8.5 million transactions were analyzed in the telecommunications sector in the first half of the year.

According to the study, 463,000 fraud attempts were detected by the company, or 5.4% of the total. Among the scams in this area, the most noteworthy are the improper use of data, misappropriation of equipment, improper sale of products or services, improper bill reduction and upsell of non-contracted services.

In the financial market (transactions related to banks, financial institutions, fintechs and credit card companies), almost 21 million transactions were analyzed, and fraud attempts reached 667,000. That is, 3.2% of all transactions in this sector were attempted frauds in processes such as opening accounts, issuing cards, personal loans and CDC (Direct Consumer Credit) through digital means.