Discover the True Cost of Fraud

Discover the True Cost of Fraud

Navigate the rising risk of fraud and learn how to grow your business safely.  Explore current fraud costs, attack rates, trends, challenges and recommendations for your industry. 

The True Cost of Fraud™ Study


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Critical Insights on Key Fraud Cost Drivers

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 a thousand fraud executives every year. 

Building on 12 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.

Select a True Cost of Fraud™ Study from the tabs below:

Explosive Growth of Ecommerce and Retail Fraud

Fraud costs rise 15%

The results of the True Cost of FraudTM Study for Ecommerce and Retail are available, and what they reveal should be of concern for those businesses. This year’s findings show a substantial increase both in cost and volume of fraud.

Every $1 of fraud now costs U.S. retail and ecommerce merchants $3.60 which is 15% higher than the pre-Covid study in 2019 which was at $3.13. This also represents a 7.1% rise since the 2020 survey which was conducted during the pandemic. Canada too, saw a significant increase since 2020. Its cost of fraud is up 5.2%, bringing the cost of fraud up to $3.02.
U.S. the cost of fraud continues to rise chart

Complete the form to download the 2021 study

The Year of Mobile

Another alarming trend? Both the U.S. and Canada had more fraud costs attributed to the mobile channel than in prior years. The pandemic pushed more consumers and fraudsters to do digital transactions, and because people rely on their smartphones, the surge was especially great on mobile. 
Recognizing the convenience of mobile transactions, consumers are unlikely to revert to prior behaviors, even when the pandemic is long over. Merchants will need to revisit security on their mobile channel if they’re to avoid additional exposure to fraud.

Additional True Cost of Fraud Study Highlights from 2021

Identity Verification Challenges

Identity fraud remains a key issue for merchants and represents a larger share of fraud losses compared to previous years. Breached digital-identity data (e-mail addresses, phone numbers) are being linked to synthetic identities and more account-takeovers.

Changing Payment Methods

The payments landscape is rapidly changing. Merchants are involved in more transactions involving non-bank, third-party payment providers, and that situation brings with it new, often unexpected risks.

Integration of Cybersecurity and Digital Customer Service

More U.S. and Canadian merchants are integrating their digital/customer experience operations with fraud prevention, as they attempt to minimize customer friction, especially since abandonment is a common risk with remote channel transactions.

Cybersecurity Alerts

Just over one-half of U.S. and Canadian merchants are using cybersecurity alerts to support fraud prevention, with more U.S. retailers also using additional fraud support capabilities.

Verify Online and Offline Traits

To be effective, security solutions must be able to verify both physical and digital identity attributes across different customer touchpoints and assess transaction risk in a fast, seamless manner for customers.

The Payoff for Using Best Practices

Merchants who invest in best-practice, multi-layered solutions that are integrated with cybersecurity and digital experience operations experience a 71% lower volume of successful fraud attacks and a 12% lower cost of fraud. 

Insights From Past Ecommerce and Retail Reports

2018 True Cost of Fraud™ Study Retail 

2019 True Cost of Fraud™ Study Retail

2020 True Cost of Fraud™ Study Retail

COVID-19 Causes a Significant Rise in Fraud on Financial Services and Lending Firms

Fraud attacks increase in 2020 according to True Cost of Fraud™ Study.

LexisNexis Risk Solutions True cost of fraud study cover
Few businesses across the U.S. have been able to avoid the negative impact of the pandemic. But some businesses, like financial services and lending firms, have been hit harder than others. Regardless of their size and type, COVID-19 has been costly for them, and the losses can’t only be attributed to a reduction in business.

A surge in digital transactions has led to increasing fraud. Like legitimate customers, fraudsters have moved more of their business online, which makes it easier for them to launch more fraud attacks and circumvent traditional risk management processes.

LexisNexis® Risk Solutions has been tracking the true cost of fraud for more than 10 years. The LexisNexis® Risk Solutions 2020 True Cost of FraudTM Study Financial Services & Lending Report edition explores the:

The impact of COVID on the cost of fraud

Impact of COVID-19 on
fraud costs
Dynamics driving fraud risks

Dynamics driving fraud risk
Org Challenges Customer Centric for the cost of fraud

Organizational challenges
of fraud prevention in a
customer-centric world
The delicate balance of the cost of fraud

Delicate balance of fraud
security versus customer

Fraud Attacks Increase For Financial Services and Lending Firms

Complete the form to download the 2020 study

According to the data, financial services and lending firms of all sizes and types have been negatively impacted by the COVID-19 pandemic. Average monthly fraud attacks increased overall. And what’s even more disturbing is that more of those attacks were successful than ever before.

Larger banks and lenders saw the most significant increases in successful attacks since the COVID-19 pandemic began compared to before this period. That rise in attacks is on top of a trend that was already trending upward.

Larger digital firms that conduct the majority of transactions remotely (online or mobile channels) experienced higher average monthly attack volumes than others since the start of the pandemic. Mid/large digital financial firms saw an increase of 39.48% in successful attack since before the shutdown, while mid/large digital lending firms experienced a 27.56% increase.

The study clearly reveals that small and large, as well as digital and non-digital, financial services and lending firms have all been hurt by the increase in fraud fueled by the pandemic.

Phone over keyboard on true cost of fraud

The Rising Cost of Fraud

In addition to higher volumes of fraud, comes another disturbing trend—an increase in the cost of fraud. The cost of fraud pre-COVID-19 among U.S.
financial services and lending firms continues to rise 12.8% over the previous reporting period, which covered
the first halves of 2018 and 2019 respectively. For every dollar of fraud lost in the pre-COVID period,
U.S. financial services and lending companies now incur an average of $3.78 in costs, up from $3.35 since 2019.

The rise in fraud costs since the start of the pandemic largely results from an increase with internal labor and/or external support to detect,
investigate and recover losses–particularly for those handling PPP loan requests.

Key Challenges in the Fight Against Fraud

Frustrated man on computer on true cost of fraud
Criminals are getting smarter and new technologies make it easier for them to circumvent current risk management processes, according to the True Cost of Fraud Study.

The issues that weigh on these financial firms generally center around revenue loss, the inability to stay ahead of emerging fraud risks and the pressure to provide seamless digital experiences.

The pandemic and brick-and-mortar shutdown came suddenly, shifting more transactions to online and mobile channels for every type and size of organization. Firms (digital, non-digital, large and small) that had not yet invested in these digital/remote channel risk mitigation solutions were caught off-guard and challenged when using traditional solutions that focus more on the physical identity attributes

See the Way Forward

True Cost of Fraud Study covers a lot of ground, but it also clarifies the three biggest challenges as you fortify your risk management strategy, particularly with mobile and international transactions:

Determining the source of transaction origination

Limited ability to determine geolocation

Balancing speed of verification with customer friction
Study findings underscore the value of adding third-party, real-time data and transaction tracking tools.

There’s also a need to employ more digital identity and behavior data and analysis to overcome the complexities of “faceless” digital channels.

Balance is key: Best results come from a multilayered approach incorporating different levels of authentication and verification appropriate to the potential risk of the transaction. The toolset should include advanced identity verification and risk assessment solutions that understand the nuances unique to digital and physical channels.

Get caught up on the latest information in financial services and lending fraud and download the study now.

Insights From Past Financial Services and Lending Reports

2018 True Cost of Fraud™ Study Financial Services

2018 True Cost of Fraud™ Study Lending

2019 True Cost of Fraud™ Study Financial Services and Lending

LexisNexis and the Knowledge Burst logo are registered trademarks of RELX Inc., used under license. LexisNexis Fraud Multiplier is a service mark of RELX Inc. ThreatMetrix is a registered trademark of ThreatMetrix, Inc. True Cost of Fraud is a trademark of LexisNexis Risk Solutions Inc. 

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