ATLANTA — LexisNexis® Risk Solutions today released the findings of its 2022 LexisNexis® True Cost of Fraud™ Study: Financial Services and Lending. This sixth edition of the study examines current fraud trends for more than 500 United States and Canadian financial services and lending companies and highlights key pain points related to the addition of new payment mechanisms, online and mobile channel transactions and international expansion. The survey was conducted between May and July 2022.
U.S. and Canadian financial services firms’ fraud costs continue to rise. Every $1 lost to fraud now costs U.S. financial services firms $4.23 compared to $3.64 in 2020, a 16.2% increase. The cost for Canadian financial services firms rose 19.6%, from $3.16 in 2020 to $3.78 in 2022.
The costs for credit and mortgage lending firms remain above pre-pandemic levels, although they are trending downward after substantial increases observed at the start of the pandemic. According to U.S. loan companies, each $1 in fraud losses costs $4.08. Canadian lending firms find that each $1 in fraud losses actually costs $3.74.Key Findings of the True Cost of Fraud Study: Financial Services and Lending
“It’s clear that fraud has become more complex with various risks occurring simultaneously,” said Chris Schnieper, senior director of fraud and identity strategy, LexisNexis Risk Solutions. “To minimize fraud, organizations can no longer rely on manual processes or point solutions to reduce fraud, manual reviews and costs. Firms using a multi-layered solutions approach that integrates identity verification and authentication within digital consumer experience can lower their cost and volume of successful fraud. This approach improves identity verification and fraud detection effectiveness and lowers friction for trusted consumers.”Methodology
The study’s findings stem from a survey of financial services and lending companies. The 426 U.S. and 76 Canadian respondents consisted of risk and fraud management executives in retail and commercial banks, credit unions, trusts and wealth management along with auto lenders, mortgage companies, finance companies and non-bank credit card and personal loan issuers.The LexisNexis Fraud Multiplier™
The cost of fraud is more than the actual dollar value of a fraudulent transaction. It includes additional costs related to labor/investigation, fees incurred during the applications/underwriting/processing stages, legal fees and external recovery expenses. The LexisNexis Fraud Multiplier determines the actual cost of fraud based on calculating these additional costs.
Download a copy of the LexisNexis® True Cost of Fraud™ Study: Financial Services and Lending Report.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. 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 LexisNexis Risk Solutions and RELX.