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 Fraud™ Study offers a timely picture of current fraud trends in the U.S. and Canadian financial services and lending industries by analyzing in-depth surveys from over 800 risk and fraud executives every year.  


Building on 14 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. 

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Explosive Growth of Ecommerce and Retail Fraud

Fraud costs rise 19.8% since 2019

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 $3.75 which is 19.8% higher than the pre-Covid study in 2019 which was at $3.13. This also represents a 4.2% rise since the 2021 survey which was conducted during the pandemic. Canada too, saw a significant increase since 2020. Its cost of fraud is up 11.1%, bringing the cost of fraud to $3.19 from $2.87.
Rising Cost of Fraud US

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The Year of Mobile

Another alarming trend? Both the U.S. and Canada fraud costs attributed to the mobile channel continue to account for a sizable portion of fraud costs among Ecommerce merchants. 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 2022

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

A growing proportion 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 significantly lower volume of successful fraud attacks and a 14% lower cost of fraud. 


Insights From Past Ecommerce and Retail Study


2021 True Cost of Fraud™ Study Retail

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2020 True Cost of Fraud™ Study Retail

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2019 True Cost of Fraud™ Study Retail

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2018 True Cost of Fraud™ Study Retail 

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Consumers and Fraudsters Move to the Mobile Channel   

Fraud attacks increased in 2022 according to True Cost of Fraud™ Study.

LexisNexis Risk Solutions True cost of fraud study cover
Transaction volume in the mobile channel matched and, in some cases, outpaced online channel transaction volume. Fraud increased, too, by 57% for U.S. investment firms and 64% for U.S. credit lenders.

Mobile fraud now accounts for approximately one-third of fraud costs as fraudsters increasingly target this channel, including through malicious bot attacks. 

LexisNexis® Risk Solutions has been tracking the true cost of fraud for more than 12 years. The 2022 LexisNexis® True Cost of FraudTM Study: Financial Services and Lending Report explores the:  

The impact of COVID on the cost of fraud

Fraud costs and attack volumes  to financial services providers 
Dynamics driving fraud risks

Impact of buy now, pay later on fraud detection 
Org Challenges Customer Centric for the cost of fraud

Challenge of accurate identity verification across the customer journey 
The delicate balance of the cost of fraud

How a multi-layered solutions approach mitigates the cost of fraud 


Fraud Attacks Increase For Financial Services and Lending Firms

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Key trends in this industry related to fraud in 2022 include phishing and scams targeting digital payments, increased bots and challenges with identity verification.  
 
In our latest study, the “2022 True Cost of Fraud Study: Financial Services and Lending Report,” we examine (a) how financial services businesses are keeping ahead of fraudsters, (b) what processes have they implemented, (c) what types of fraud are trending, and (d) what prevention methods are working. 
 
The findings come from a survey of 500+ risk and fraud management executives in financial services and lending companies in the U.S. and Canada. Subject areas include fraud costs and attack volumes, changes across engagement channels, scams impacting each step of the customer journey and fraud prevention smart practices. Get all the latest findings, figures and recommendations. 
Phone over keyboard on true cost of fraud

The Rising Cost of Fraud

U.S. and Canadian financial services firms’ fraud costs continue to rise, up to 22.4% since early 2020. The cost of fraud is highest among U.S. banks,
where every $1 of fraud loss actually costs $4.36. For mortgage firms, every $1 of fraud loss costs $4.20. 

Fraud attack volumes remain significantly higher, particularly with application fraud through direct-to-consumer transactions.  
 
Fraud continues to target mobile channel transactions, with 95% of financial services firms and 96% of lenders
saying fraud targeting mobile has increased. 


Key Challenges in the Fight Against Fraud

Frustrated man on computer on true cost of fraud
The online and mobile fraud landscape continues to evolve. Fraudsters relentlessly seek new vulnerabilities to exploit, such as through new methods of payment and changing consumer behavior. They’re also continually creating new scams and increasing the volume of their attacks by using bots.  
  
Financial services companies and lending institutions can never let their guard down. Being prepared for all types of fraud is critical. Effective fraud prevention begins with confident identity verification (date of birth, national ID number, address, etc.) and authentication (confirming that the person is who they say they are). Both verification and authentication remain a top challenge for financial services firms and lenders, elevating risk of fraud across the customer journey.   
 
As more transactions occur online, and digital channels expand, financial businesses will encounter new threats, including some that may not be detectable with current  
fraud and risk mitigation processes. 
 
However, fraud mitigation measures impact legitimate interactions. Consumers expect fast, convenient experiences across platforms and devices. Undue friction can result in a negative customer experience that tarnishes the brand and reduces customer loyalty. 

See the Way Forward

The 2022 True Cost of Fraud Study: Financial Services and Lending Report delivers not only essential insight for navigating emerging fraud trends, but also five recommendations to fortify risk management strategies, particularly with mobile transactions: 
Digital Identity

Include digital identity attributes when identity proofing to increase confidence in anonymous users. 
security shield layers

Customize a multi-layered solutions approach to protect each phase of the customer journey. 
Inspired Idea

Apply smarter risk assessment and friction with insights from digital identity solutions and behavioral analytics. 
Bot Defense

Distinguish customers from malicious bots via technology-based solutions.  
money

Mitigate fraud during the distribution of funds via transaction risk technology. 
Study findings underscore the value of adding third-party, near 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 challenges of remote digital interactions and transactions. 

Balance is key: Best results come from a multi-layered approach calibrated to the potential risk of the transaction. The toolset should include advanced identity verification and risk assessment solutions designed to navigate the nuances unique to digital and physical channels. 
 
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Insights From Past Financial Services and Lending Study

2021 True Cost of Fraud™ Study Financial Services and Lending

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2020 True Cost of Fraud™ Study Financial Services and Lending

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2019 True Cost of Fraud™ Study Financial Services and Lending

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2018 True Cost of Fraud™ Study Lending

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Fight Fraud Successfully

Study analyzes what’s working in fraud detection and prevention.

LexisNexis® True Cost of Fraud™ Real Estate Study

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.

Download the study.

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Financial Services Corporations and Non-Profits
Fraud Identity
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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