ATLANTA — LexisNexis® Risk Solutions released its latest Small and Midsize Business (SMB) Lending Fraud Study. Based on a survey of lenders, SMB lending fraud has increased significantly during the past 12 months, with many smaller banks, credit unions and fintechs expecting fraud levels to worsen over the next year. Overall, 84% of respondents said that SMB lending fraud has increased at an average of 14.5% year-over-year (2021 to 2022), a significant increase from the 6.9% increase experienced the year prior.
Although bogus business credentials and fake consumer/owner identities remain the most common type of SMB lending fraud, lenders are also experiencing more legitimate business and fake or synthetic identity fraud which they find challenging to mitigate effectively. Most lenders attribute increased fraud to multiple factors including lack of effort on curbing SMB lending fraud, market economic uncertainties and the perception that SMBs are an easier target than consumers and online/mobile channel transactions.Key Findings on SMB Lending Fraud
“The study shows that lenders using a multi-layered anti-fraud approach that integrates fraud prevention measures with digital channel operations can be more effective at detecting and mitigating fraud and its costs early,” said Tom Hunt, director of business risk strategy at LexisNexis Risk Solutions. “This also includes solutions that assess both the physical and digital identity attributes, as well as the risk of the transaction itself. Best practice fraud detection and mitigation involves a layering of complementary solutions to address unique risks from different channels, payment methods and products to address every touchpoint across the customer journey.”Top Three Recommendations for Preventing SMB Lending Fraud
The study surveyed 147individuals working at banks, credit unions, fintech/digital lenders and payment processors with responsibility for risk and fraud assessments or decisions for SMB customers. SMBs are businesses earning up to $10 million annually. The study set out to better understand SMB lending fraud, specifically its volume, how institutions identify and track fraud, the types of fraud experienced, what institutions are doing to combat fraud and whether there are differences in SMB lending fraud based on the size or type of organization. Global market research firm KS&R collected respondent data by phone during September and October 2022.
Download the latest LexisNexis Risk Solutions Small and Mid-Sized Business (SMB) Lending Fraud Study.
About LexisNexis Risk Solutions
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. 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 and analytics for professional and business customers. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
Senior Director, Global Communications