The True Cost of FraudTM Study offers an accurate picture of current fraud trends in the U.S. and Canadian retail and financial services industries by analyzing in-depth surveys from over 800 fraud executives every year.
Building on 13 consecutive years of research, the study explores the evolution and expansion of fraud and shares insights and recommendations on how to better protect your business, successfully manage fraud risks and strengthen customer trust and loyalty.
New data reveals that fraud is rising for mortgage origination, mortgage servicing and title/settlement companies in the U.S. LexisNexis® Risk Solutions recently conducted a study in which we surveyed 360 risk and fraud executives in the industry.
The results are meant to help organizations take a look at their own fraud-related issues and be proactive in making improvements. Here’s what the study found:
Attack Volume and Costs: The volume and cost of mortgage-related fraud is high for originators, servicers and title/settlement firms. Much of that cost goes to labor used for fraud detection, investigation, reporting and recovery. Depository originators have the highest cost. Every $1 of fraud costs them $5.34.
Transactional Types: The biggest culprit in fraud costs involves consumers purchasing a new home through online and mobile transactions. However, depository originators and title/settlement companies also experience significant fraud losses from construction-related loans.
Identity Challenge: The biggest challenge for mortgage and title companies is identity verification. However, companies are hesitant to step up their identity verification process because it contributes to customer friction.
Additionally, mortgage and title companies struggle to detect malicious bots and distinguish legitimate customers from fraudsters. This is especially true for the mobile channel but they are also seeing an increase in fraud with call center/phone-based interactions.
Current Fraud Protection: Most organizations have inadequate fraud protection. They must step up their prevention methods if they are to keep pace in mitigating risk. They can no longer react to fraud after it happens; they need to be proactive or risk significant losses.
Top Recommendations: The most effective fraud protection comes from a multi-layered solutions approach, according to the study. There’s no one-size-fits-all so businesses need to employ different solutions to combat different types of fraud.
To add fortitude to their fraud prevention, the study recommends integrating their fraud processes with their cybersecurity operations and the digital customer experience. Intertwining those areas creates a stronger defense without causing excessive friction for customers.
Additionally, layering in supportive capabilities such as Social Media intelligence and AI/ML further strengthens fraud prevention. It lowers both the cost and volume of successful fraud.
Want to know more? The “LexisNexis® True Cost of Fraud™ Real Estate Study", includes detailed data on fraud attacks, costs, mobile channel impact, customer journey fraud risks and fraud prevention best practices. Get all the latest facts, figures and recommendations.
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