LexisNexis Risk Solutions has released its 11th annual “LexisNexis Risk Solutions 2020 True Cost of Fraud Study: e-Commerce/Retail Edition.”
The study that surveyed risk and fraud executives at e-commerce and retail companies in the U.S. and Canada reveals that fraud continues to increase and most acutely affects mid to large-sized e-commerce and retail businesses.
According to the report, retailers experienced increased online and e-commerce fraud volumes and monetary losses correlating to a mass shift to online and mobile transactions during the COVID-19 pandemic. The result of increased fraud volumes translates into a 7.3 percent increase in the cost of fraud year-over-year for U.S. e-commerce and retail merchants. The “LexisNexis Fraud Multiplier” – the total amount of costs related to fees, interest, merchandise replacement and redistribution per dollar of fraud for which the merchant is held liable – shows fraud now costs companies $3.36 for every dollar lost to fraud compared to $3.13 in 2019 and $2.40 in 2016.
"Retailers and e-commerce merchants should be prepared for increased fraud attacks and costs for the foreseeable future," says Kimberly Sutherland, vice president, fraud and identity management strategy, LexisNexis Risk Solutions. "It is unclear how the COVID-19 pandemic will shape the purchasing landscape over the next few years, although we do know that fraudsters will continue to shift tactics quickly in response. The most effective way for businesses to fight fraud and protect their consumers is by performing a more complete assessment, combining physical and digital identity data of those making purchases. 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."
To learn more about the study join the company’s webinar with Chris Schnieper, director of fraud and identity at LexisNexis Risk Solutions, on July 29 at 2:00 p.m. ET.