Retail fraud volume and cost ‘increase sharply’
Written by Peter Walker
Retailers have revealed that successful fraudulent transactions were up nearly 30 per cent this year, compared to 2017, according to LexisNexis Risk Solutions research.
The Fraud Multiplier, which measures the cost for each dollar of fraud loss, found that every dollar of fraud in 2018 cost merchants $2.94, up from $2.77 a year ago, or a six per cent increase.
The report also found the volume of successful and thwarted fraudulent attempts rose steeply at the companies surveyed, from a monthly average of 238 to 306 successful fraudulent transactions, year-on-year, and from 257 to 313 prevented fraudulent transactions.
Mobile commerce continues to be the sector most susceptible to fraud, particularly with identity fraud. Mid- to large-size mobile commerce merchants that sell digital goods see 39 per cent of the fraud losses from identity theft, including synthetic identities.
“The hotly competitive retail landscape means merchants must meet customer expectations for convenience and continually drive business growth,” said Kimberly Sutherland, senior director for fraud and identity management strategy at LexisNexis Risk Solutions. “It’s crucial for retailers to not just invest in a large number of fraud prevention solutions, but the right combination and layering of the solutions to defend against different threats.”
The research showed that digital goods merchants which layer core, identity and fraud transaction solutions have lower fraud costs ($2.88 for every $1 of fraud) than those that use only a limited set of core solutions (up to $3.61 per $1 of fraud).
The study targeted US retailers with a survey of 703 risk and fraud executives, conducted during March 2018. Respondents represented all channels, company sizes, industry segments, and payment methods.