LexisNexis Risk Solutions True Cost of Fraud Study Finds Fraud Costs Increased 7.3% for U.S. Retailers Year over Year
Study examines e-commerce and retail fraud trends before and during the COVID-19 pandemic
The result of increased fraud volumes translates into a 7.3% increase in the cost of fraud year-over-year for
The True Cost of Fraud Study is a comprehensive survey that compares fraud rates, impacts and challenges related to fraud detection and prevention year-over-year and during COVID-19.
Key Findings and Trends from the Study
Successful Fraud Attacks Increase: The average volume of monthly fraud attacks increased 9% for
U.S.retailers year-over-year while the average number of successful monthly fraud attempts increased 43% - 48% for mid to large retailers and 27% for smaller retailers. Attack volumes were already trending upward prior to the shutdown as mobile and online channels traditionally have higher fraud rates. Some of this growth is due to increased transaction volume due to the temporary closing of brick-and-mortar retailers during the pandemic.
Shutdown Spurs Increase in Fraud Costs: A comparative analysis of those surveyed showed that average monthly fraud attack volumes were significantly higher for specific retail segments who responded to the survey during the shutdown. Mid to large general merchandise retailers selling physical and digital goods had on average 70% more fraud attempts per month than those surveyed prior to the shutdown in
March 2020. Businesses that continued operations during the pandemic who had higher mobile purchase transactions with in-store pick up experienced more fraud volume and coinciding higher fraud costs since these retailers had to rely on store employees for identity authentication rather than solutions designed to detect mobile fraud.
- Retailers Struggle to Keep Pace with Fraudsters: Retailers are finding it difficult to distinguish legitimate customers from malicious bots while balancing fraud prevention with risk-appropriate customer friction. This becomes even more complicated when purchases involve third-party, non-bank payment providers where transaction speed and volume are high and transparency into complex payment chains and end-customer profiles is low. Mid to large retailers selling digital goods are more challenged detecting and preventing fraud within these payment types. Fifty-eight percent of retailers selling digital goods say differentiating synthetic identities is a top verification challenge. Businesses new to mobile commerce contend with these issues more than businesses with more established fraud and risk mitigation solutions.
"Retailers and e-commerce merchants should be prepared for increased fraud attacks and costs for the foreseeable future," said
"High fraud costs impact e-commerce merchants and retailers as sophisticated threats increase," Sutherland continued. "A multi-layered strategy can protect retailers and e-commerce merchants throughout each buyer experience. Every transaction channel and type carry unique risks. Using different solutions to support fraud detection at various points in the consumer journey will strengthen overall defense."
This is the 11th annual comprehensive research study on
Download a copy of the 11th annual LexisNexis Risk Solutions True Cost of Fraud Study: e-Commerce/Retail Edition and join our webinar with
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro
View original content to download multimedia:http://www.prnewswire.com/news-releases/lexisnexis-risk-solutions-true-cost-of-fraud-study-finds-fraud-costs-increased-7-3-for-us-retailers-year-over-year-301097060.html