According to the LexisNexis Risk Solutions True Cost of Fraud Study, North American e-commerce and retail companies face a total cost of $3.00 for every dollar lost to fraud.

Atlanta – web wire – Wednesday, March 27, 2024

• 60% of e-commerce merchants and 53% of retailers experienced an increase in overall fraud levels.
• Digital channels contribute to more than half of e-commerce and retail fraud losses.
• One in five transactions uses digital payment methods such as digital wallets, BNPL, and cryptocurrencies.

LexisNexis Risk Solutions has revealed the findings of the 14th edition of its annual report. LexisNexis True Fraud Cost Study: E-Commerce and Retail Report US and Canada Edition. This report is based on research commissioned by Forrester Consulting and shows that merchants in the U.S. and Canada incur an average cost of $3.00 for every dollar of fraud.

As digital services become more prevalent in North America and everyday life becomes more digital, cybercriminals have more opportunities to exploit both consumers and businesses. More than half of survey respondents across North America reported that fraud had increased by more than 6% in the 12 months prior to the survey, with digital channels accounting for 53% of all fraud losses. I am.

E-commerce organizations experience nearly 40% more fraudulent transactions compared to primarily brick-and-mortar retailers. One-fifth of transaction volume occurs through digital payment methods such as digital wallets, payment apps, Buy Now Pay Later (BNPL), and cryptocurrencies. Digital transactions account for more than half of the revenue. Widespread adoption of these techniques could expose merchants to more frequent and sophisticated fraud attacks.

The impact of fraud on merchants is multifaceted and includes fines, fees, the face value of fraudulent transactions, and the cost and effort associated with replacing lost or stolen items. This doesn’t take into account the potential long-term impact on the customer experience, even though organizations are incurring fraud costs that are three times the actual value lost by the fraudster. His 75% of respondents noted the impact on customer conversion rates.

Retailers face the challenge of balancing customer safety and customer experience while combating new fraud techniques and integrating new fraud mitigation features. The increasing adoption of a wide range of payment methods by consumers forces merchants to accept new payment methods, thereby expanding their attack surface and increasing the risk of fraud.

It’s important to strike the right balance between effective fraud management and a seamless customer experience. Kimberly Sutherland, vice president of fraud and identity strategy at LexisNexis Risk Solutions.. For merchants, it’s essential to make the customer onboarding and payment process as smooth as possible to prevent abandonment and customer churn. To respond quickly to new fraud trends and rising consumer expectations, merchants must adopt a dynamic and agile approach to risk assessment. Capabilities integrated through risk-based workflows are supported by rich identity intelligence and robust linking technology to facilitate the flexibility needed for more secure and convenient interactions and transactions..

Key findings from the True Cost of Fraud Study: E-commerce and Retail:

• Multi-pronged attack on merchants: With the rise of new digital commerce and payment methods, transaction fraud is becoming more frequent and sophisticated. 60% of e-commerce merchants and 53% of retailers report an increase in overall fraud levels. Retailers now identify fraudulent chargebacks as the fastest growing type of fraud, while e-commerce sellers cite identity theft as the fastest growing type of fraud. I am.
• Despite consumer education efforts, the majority of losses due to fraud are caused by fraud. Despite 46% of merchants surveyed saying they make efforts to educate customers about information security and fraud prevention, the number of consumers falling victim to fraud continues to grow. Approximately 34% of fraud losses in the region are currently believed to be due to fraud.
• Digital payments and BNPL vulnerabilities: Due to the increasing frequency and scale of data breaches compromising consumer data (including card information) and their widespread use, credit and debit cards account for the largest share of fraud losses . However, merchants must also prioritize monitoring digital payments and their BNPL transactions, as these new methods already account for 37% of fraud losses.
• Most fraud losses occur during new account creation, with more attacks occurring during the purchase stage. Identity theft and fake account registration, especially in the e-commerce space, pose a significant risk during the new account creation process. For both brick-and-mortar retailers and e-commerce merchants, up to 47% of fraud losses are attributable to this stage of a customer’s journey, despite having fewer incidents overall compared to other stages. is reported.

methodology: The True Cost of Fraud Study surveyed 358 risk and fraud executives at retail and e-commerce companies in the United States (289 people) and Canada (69 people). Data collection and survey questions refer to a 12-month period. This research provides organizations with data and analysis to understand the current state of fraud in emerging markets and the challenges associated with digital payments. This information was obtained from research commissioned by Forrester Consulting on behalf of LexisNexis Risk Solutions in August 2023.

download LexisNexis True Cost of Fraud Study: E-Commerce and Retail Report.

About LexisNexis Risk Solutions
lexisnexisRisk Solutions leverages the power of data, advanced analytics platforms, and technology solutions to help companies across multiple industries and government agencies reduce risk and improve decision-making to benefit people around the world. Provide useful insights. Headquartered in metropolitan Atlanta, Georgia, with offices worldwide, we are RELX (LSE: REL/NYSE: I am a member of RELX). Learn more about.LexisNexis Risk Solutionsandrelax.

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