Each fraudulent transaction costs almost US $4 for each $1 Lost to fraud
SINGAPORE, July 7, 2022 /PRNewswire/ — LexisNexis® Risk Solutions has released the latest Asia Pacific Edition of the LexisNexis® True Cost of Fraud™ study, which surveyed 387 risk and fraud executives Malaysia, Philippines, Singapore and Thailand. The study analyzed fraud trends in retail, e-commerce, financial services and lending and highlighted the key vulnerabilities related to new digital payment methods and transaction channels.
The study found that fraud costs across APAC increased by 10% to 16% from pre-pandemic levels in 2019. The LexisNexis Fraud Multiplier™ determined this for all USA $1 Losses from fraud cost the organization average $3.99compared to $3.50 in 2019. Fraud costs per transaction were higher than average, weighing on digital banks and alternative lenders $6.33. Other new payment channels like Buy Now Pay Later (BNPL) and digital wallets are costing businesses $4.75 for every dollar lost through fraud.
Scammers evolved tactics in tandem with changes in consumer behavior caused by the pandemic. A recently Cyber crime report showed that consumers have made a significant shift to mobile transactions, which now account for 75% of all transaction traffic globally. While face-to-face transactions remain the most popular point-of-sale channel, fraud is more prevalent in online than mobile channels. Within the mobile channel, 34% of fraud occurs through mobile web browsers.
Key Findings of the True Cost of Fraud Study – APAC Edition:
Scammers target alternative finance providers – According to the study, competition in the BNPL market is accelerating across the globe, led by local, homegrown players in all markets. BNPL providers saw a 65% increase in new account creation, consistent with strong growth in remote online and mobile transactions. However, BNPL providers also account for more than a tenth of payment losses, which is disproportionately higher than the average transaction volume across other payment channels.
Identity verification challenges – The biggest contributor to fraud losses for organizations remains the inability to identify synthetic identities and to verify and authenticate identities based on attributes such as phone numbers, email addresses, behavioral analytics, and devices. E-commerce merchants in particular find identity verification difficult as they need to balance providing a seamless customer experience with implementing step-up authentication and security measures.
adoption of a Fraud Management Framework – Almost all digital banks and alternative finance providers, including BNPL and digital wallets, have yet to fully integrate cybersecurity and operations into fraud prevention processes. Findings also show that organizations are not making extensive use of artificial intelligence (AI) and machine learning (ML) models for fraud detection, weakening mitigation efforts. Percentage of organizations using different ways to combat fraud:
“Organizations are fighting an uphill battle against scammers in the new normal,” he said Than Tai, Director of Fraud and Identity Strategy, LexisNexis Risk Solutions. “Fraud is sophisticated and evolves extremely quickly. We are seeing a high volume of fraud attempts following an ongoing shift to digital channels driven by the pandemic. This means businesses need to integrate a fraud detection and prevention approach with both physical and digital identity attributes to improve customer experience, stay competitive and avoid losses.”
The True Cost of Fraud APAC study surveyed 387 risk and fraud managers in retail, e-commerce, and financial services/lending Malaysia, Philippines, Singapore and Thailand. The data collection took place in February/March 2022 and survey questions relate to the last 12 months.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to deliver insights that help businesses and government agencies reduce risk and improve decisions that benefit people around the world. We provide data and technology solutions for a variety of industries including insurance, financial services, healthcare and government. Headquartered in the greater Atlanta area, Georgia, we have offices around the world and are part of RELX, a global provider of information-based analysis and decision-making tools for professional and business clients. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
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SOURCE LexisNexis Risk Solutions