E-commerce fraud costs persist for e-tailers, according to 2018 LexisNexis Risk Solutions True Cost of Fraud Study

12/19/2018

ATLANTA — LexisNexis® Risk Solutions, a part of RELX Group (NYSE: RELX), today released its 2018 True Cost of Fraud℠ study for the e-commerce sector. The study finds that fraud has risen 35 percent, year over year, among mid to large-size ($10M+ in sales) e-tailers, a significant increase. According to the LexisNexis Fraud Multiplier™, the cost of fraud for mid to large-size companies remains higher than for smaller companies. Every $1 of fraud results in $3.20 in fraud-related costs, compared with $2.32 for smaller businesses, which includes chargeback fees, merchandise replacement and labor costs for employees.

"E-tailers must remain vigilant in battling fraud, because the threat has grown since 2017. Larger e-tailers have seen nearly a doubling of successful fraud attempts targeted at their companies year-over-year, which reflects this danger," says Kimberly Sutherland, senior director, fraud and identity management strategy, LexisNexis Risk Solutions. "Increased levels of successful fraud attempts indicate clearly that despite ongoing efforts, the solutions implemented by e-tailers may not be optimal. As these businesses grow and expand into digital goods and m-commerce, so does the opportunity for fraud, which makes the need for increased intelligence around both the digital transaction and the consumer that much more critical.”

LexisNexis Risk Solutions surveyed 200 risk and fraud executives in retail organizations that earn 80 percent or more of their revenue through online or mobile sales channels. The executives who responded cite cloud-base applications, digital subscriptions, mobile apps, downloadable software, online gaming and music streaming products as major contributors to higher levels of fraud. Credit card transactions remain the largest payment method for fraudulent transactions, while alternative online payments also contribute to rising successful fraud rates among e-commerce merchants.

There is no one size fits all approach for e-commerce companies looking to prevent fraud. Factors such as digital versus physical goods and mobile-based transactions versus non-mobile transactions must be assessed when tailoring the best fraud prevention solutions for an individual business. Those that layer solutions by identity authentication and transaction/identity verification tend to experience lower costs of fraud and spend less budget on manual reviews, improving their bottom line, as well as the overall customer experience.

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency. Headquartered in metro Atlanta, Georgia, the company has offices throughout the world, serves customers in more than 190 countries and territories and is part of RELX. For more information, please visit LexisNexis Risk Solutions and RELX.