LexisNexis Risk Solutions published their 13th annual “True Cost of Fraud™ Study: Retail and eCommerce,” examining transactional fraud trends in the U.S. and Canadian eCommerce and retail markets.
The company used their LexisNexis Fraud Multiplier™ to estimate the total amount of lost dollars. They based the number on actual dollar values of fraudulent transactions. The company claims that every $1 lost to fraud costs merchants an average of $3.75 in the U.S., and $3.19 in Canada, resulting in a 19.8% increase in cost since 2019.
The study surveyed 791 risk and fraud executives, discovering that eCommerce merchants have the highest fraud multiplier. Mobile commerce (mCommerce) has the highest increase in fraudulent attacks, showing a 52% increase in the U.S. and a 101% increase in Canada, with many merchants indicating they follow a mobile-first strategy when designing consumer shopping experiences.
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 increased 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 reasonably similar to the amount attributed to other customer journey points.
- Bringing Together Security and Customer Experience: Roughly half of the 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.
For companies that don’t integrate fraud prevention strategies or optimize risk-to-friction levels, they spend about $4.24 for every dollar lost.
“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.”
Download a copy of the 13th annual True Cost of Fraud™ Study: Ecommerce and Retail – U.S. and Canada Edition.