LexisNexis® Risk Solutions released its 2021 True Cost of Fraud™ APAC Study—Regional Synopsis, and its revelations will likely spark concern for the Asia Pacific (APAC) region.
The cost of fraud continues to rise for retail, e-commerce and financial institutions for Australia, Hong Kong, India and Japan. Depending on the market, the cost of every fraudulent transaction is between 3.51 and 3.87 the actual lost transaction value. All four countries reported higher costs than the regional 2019 average that involved other APAC markets at 3.40. The pandemic only added fuel to the fraud problem.
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:
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:
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.
Want to know more? Download the LexisNexis® Risk Solutions 2021 True Cost of Fraud™ APAC Study – Regional Synopsis.