Illustration of changing travel patterns' impact on fraud in Feedzai's Financial Crime Report

What a difference a fiscal quarter makes! According to exclusive data outlined in Feedzai’s latest Financial Crime Report: The Dollar Takes Flight, the U.S. economy looks remarkably different in the second quarter of 2021 compared to the first quarter. The combination of vaccine rollouts and stimulus payments reaching bank accounts has American consumers ready to embrace post-pandemic life. As consumers change their habits, financial institutions will need to make sure they’re prepared to address a sizable increase in transaction activity - and stop fraudsters looking to take advantage of the chaos.

Listen to The Financial Crime Report: The Dollar Takes Flight (7 mins):

Vaccines, Stimulus Give U.S. Economy a Boost

Feedzai’s research found strong vaccine rollouts and stimulus payments reaching consumers’ bank accounts boosted the U.S. economy in Q2 2021. More than 60% of the eligible U.S. population has received at least one dose of COVID-19 vaccines and more than $384 billion in stimulus payments have been distributed to recipients. Both factors have given the U.S. economy a much-needed boost with Americans eager to move past lockdowns, reunite with friends and family members, and travel again.

Notable findings in the Financial Crime Report include:

21% increase in travel, cross-state spending

The internet was flooded with images of families tearfully reuniting with loved ones after a year apart in Q1 2021. In Q2 2021, we can understand the financial impact of these emotional reunions. The report found consumer cross-state spending was up by 21% in March 2021 compared to January 2021.

Cross-Border Spending Surges 410%

Americans aren’t just increasing travel across states. The Financial Crime report also found Americans are ready to travel abroad again and at significantly high levels. Cross-border travel surged by 410% in Q2 2021. Not only are Americans traveling internationally more, but they’re also spending more during their travels – dollar amount transactions were up 383%.

Financial Crime Report Finding: Fraudsters Flourish 

Unfortunately, consumers aren’t the only ones on the move. Fraudsters also increased their activities. Banking fraud attacks rose by 159% in Q1 2021 compared to Q4 2020. This includes internet, telephone, and branch banking.

Fraudsters phone it in

Business telephone banking saw one of the most significant jumps in fraud attacks rising by 728% Q1 2021, according to the FinCrime report. However, telephone banking dropped by 84% by summer of 2020 making up only 0.4% of all banking transactions in 2021. This means the overall share of telephone banking fraud was relatively small.

Online attacks account for 83% of all card fraud

The proliferation of EMV-enabled credit and debit cards have made physical cards harder targets for fraudsters. That’s why fraudsters have shifted their focus to cybercrime – specifically card-not-present (CNP) transactions where physical cards aren’t needed. CNP activity represented just 18% of all transactions, but drove 83% of all fraud attempts.

The Top 5 Banking Scams

Fraudsters used a wide range of tactics to separate consumers from their money. The five most common scams used by scammers include:

Fraudsters take over a legitimate user’s account by gaining access to their credentials. 

  • Account Opening Identity Theft – Up 23%

Fraudsters open new accounts in other peoples’ names using stolen identities.

  • Impersonation Scams – Up 21%

Fraudsters pretend to be authority figures – such as bank officials or law enforcement officers – to trick victims into granting them access to their accounts.

  • Purchase Scams – Up 15%

Buyers pay fraudsters for items online that ultimately never arrive.

  • Phishing Scams – Up 7%

Scammers use emails and other communication tactics to trick account holders into revealing personal information.

The report delves into the state of financial crime in 2021, outlining how consumers changed their banking habits, how cash fared in the pandemic, and includes tips for banks to keep their customers safe as they travel again. Plus, understand the top five anti-money laundering (AML) red flags that banks should watch out for and how fraud activity and economic recovery fared in the United Kingdom and the APAC region.

Want more details on the financial crime landscape? Download Feedzai’s Q2 2021 Financial Crime Report to gain detailed fraud and financial crime insights from over 12 billion global financial transactions.