The LexisNexis Risk Solutions True Cost of Fraud Study Finds a 19.8% Increase in Retail Fraud in the U.S. Since 2019
The 13th annual True Cost of Fraud Study by LexisNexis Risk Solutions highlights significant increases in fraud costs for U.S. and Canadian merchants. U.S. retailers now incur an average cost of $3.75 per $1 lost to fraud, a 19.8% rise since 2019. For Canadian merchants, the cost is $3.19, an 11.1% increase. The study reveals that fraud linked to mobile commerce is rising, with U.S. attacks increasing 52% and Canadian attacks by 101%. Moreover, integrating fraud prevention with customer experience can reduce the cost of fraud, benefiting merchants.
- Integration of fraud prevention with customer experience reduces costs.
- Mobile wallets and BNPL apps enhance customer experience despite risks.
- Significant increase in fraud costs for U.S. merchants by 19.8% since 2019.
- Fraud costs for Canadian merchants rose by 11.1% since 2020.
- U.S. retailers reported a 40% increase in bot attacks.
Retailers and Ecommerce Merchants Align with Evolving Consumer Purchasing Preferences by Increasing Acceptance of Mobile Wallet, Buy Now Pay Later and Social Media Payments
ATLANTA, Aug. 2, 2022 /PRNewswire/ -- LexisNexis® Risk Solutions unveiled the results of its 13th annual True Cost of Fraud™ Study: Retail and Ecommerce, which examines current transactional fraud trends in the U.S. and Canadian ecommerce and retail markets.
The LexisNexis Fraud Multiplier™ – an estimate of the total amount of loss a firm occurs based on the actual dollar value of a fraudulent transaction – estimates that every
A similar trend followed for Canadian merchants, with costs increasing from
Survey respondents also indicated that mobile commerce (mcommerce) continues to be associated with an increase in fraud attacks. Year-over-year changes in average monthly attack volume are relatively unchanged for those that do not allow mcommerce, but that figure is
More retailers and ecommerce merchants have implemented mobile channel transactions since the start of the pandemic to meet changing consumer behaviors and preferences. Many merchants indicated they now follow a mobile-first strategy of designing the consumer shopping experience around a consumer's mobile web journey. Mobile wallets, buy now, pay later (BNPL) apps and social media payments enhance the customer experience. However, with that comes increased fraud risk.
Key Findings and Trends from the Study:
- Attack of the Bots: U.S. retailers and ecommerce merchants were hit hardest by malicious bot attacks. Forty percent (
40% ) of U.S. retailers said they have experienced an increase in bot attacks over the past 12 months. U.S. ecommerce merchants identified a significantly higher percent of transactions as malicious (35% ) compared to other segments. - Fraud Through the Customer Journey: Identity fraud is a leading reason for fraud losses across the customer journey. Many merchants indicated that new account creation and/or the point of purchase were most susceptible to fraud. However, the percentage of fraud costs attributed to account logins or compromises is fairly similar to the amount attributed to other customer journey points.
- Bringing Together Security and Customer Experience: Roughly half of merchants indicated that they have fully integrated their digital customer experience operations with fraud prevention strategies. A sizeable minority of the remaining half are at least partially moving towards this objective, including deploying solutions that work behind the scenes to uncover digital attribute and behavior anomalies while minimizing customer friction.
The LexisNexis Fraud Multiplier estimates that every
"Businesses should take a multi-layered solution approach unique to different customer journey phases, which assesses the risks and behaviors within various digital channels," said Maanas Godugunur, director, fraud and identity, LexisNexis Risk Solutions. "Study findings show that firms that follow this approach are likely to realize a lower cost of fraud, experience fewer successful fraud attacks per month and have challenges with identity verification, bot attacks and customer friction."
LexisNexis® True Cost of Fraud™ Study: Ecommerce and Retail, U.S. and Canada Edition Methodology
This is the 13th annual extensive research study on U.S. merchant fraud and the second year surveying Canadian merchants. The study surveyed 791 risk and fraud executives in retail and ecommerce companies in the U.S. (689) and Canada (102) from November through December 2021. Respondents represented a wide spectrum of retail merchants. Findings provide a current snapshot of key pain points related to adding new payment mechanisms, transacting through online and mobile channels and expanding internationally, amongst other topics. The study also reflects activity, fraud risks, challenges and costs associated with pandemic impacts. The margin of sampling error for findings reported at an overall level is +/-3.5 at the
Download a copy of the 13th annual True Cost of Fraud™ Study: Ecommerce and Retail – U.S. and Canada Edition.
About LexisNexis Risk Solutions
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 Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
Media Contact:
Marcy Theobald
678.694.6681
Marcy.Theobald@lexisnexisrisk.com
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SOURCE LexisNexis Risk Solutions
FAQ
What is the increase in fraud costs for U.S. merchants according to the True Cost of Fraud Study?
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