2021 True Cost of Fraud™ APAC Study

The higher cost of fraud is based on many factors

Fraud is becoming more insidious for a number of reasons: market events are influencing transaction channels/payment methods, the challenges businesses face when assessing fraud with these transactions, and the less-than-optimal approach businesses take towards fraud detection, prevention and minimised customer friction. When the impact of the pandemic is added, some trends begin to emerge:

• Each market saw an increase in the use of digital transactions and digital payment methods while cash and in-person transactions dropped.
• India and Hong Kong were more fundamentally changed because both traditionally had more in-person and cash-driven transactions. Both markets had to adapt quickly, and many businesses were not well prepared.
• E-commerce merchants, particularly in India and Hong Kong, experienced more challenges in the past 12 months.

Identity verification and difficulty determining transaction origination are common challenges

While intensity varies, identity verification—based on the rise of synthetic identities—is the top online channel fraud challenge citied by businesses. E-commerce merchants in particular are hard  hit due to the limited use of solutions such as device ID and geolocation. Also, as mobile/digital wallets and other contactless payment methods have emerged, many e-commerce markets find it difficult to assess fraud risk, especially in the mobile channel.

Among the challenges hampering identity verification are:

• The rise of synthetic identities
  
• A surge in the move to new digital payment methods
  
• Increased volume of botnet attacks
  
• Inability to confirm origination location
  
• Limited access to real-time risk assessment data and tools
  
• Difficulty in balancing speed with friction

The time has come for a multi-layered solution

As fraud becomes more complex, various risks can occur at the same time with no single solution. Fraud tools need to authenticate both digital and physical criteria, as well as identity and transaction risk. 

Many merchants and financial institutions are not using fraud detection solutions that would mitigate their key challenges. For Australian and Japanese markets, this primarily relates to limited solutions use by e-commerce merchants, even though e-commerce has been established in these countries.

Here are the recommendations that businesses need to implement to bolster their fraud prevention readiness.

• Technology innovation is key. Organizations can no longer afford to rely on manual processes with the assistance of limited technologies to reduce challenge rates, manual reviews and costs.
• A multi-layered fraud defense is required including a single authentication decision platform that incorporates near real-time event data, third-party signals and global, cross-channel intelligence.
• Identity and management fraud strategies begin with something simple—email addresses. After all, email is already a primary contact channel that organizations use to reach their customers.
  
• Bot attacks can be minimised by using behavioral biometrics. This fraud defense strategy analyzes the way a user interacts with a device and reliably differentiates between user profiles.
  
• Cybersecurity and digital customer experience operations must be integrated with fraud processes to provide efficiencies and cost savings. 
• Creating an industry alliance is a great option to compliment your own intelligence.

Want to know more? Download the LexisNexis® Risk Solutions 2021 True Cost of Fraud™ APAC Study – Regional Synopsis.