Every dollar of fraud costs FIs almost USD 3, LexisNexis survey shows

Monday 1 October 2018 10:40 CET | News

Every dollar of fraud costs credit unions and other financial services providers about USD 2.92 in fees, fines, interest, labour, and other expenses, according to LexisNexis Risk Solutions.

This spending represents a 9.3% increase over 2017. Moreover, the survey of 175 risk and fraud executives at credit unions, banks, and investment, trust, and wealth management companies also found that fraud costs consumed 1.53% of every dollar of revenue for financial services providers in 2018, compared to 0.95% in 2017.

Some other findings from the study included: 56% of the respondents said fraud is inevitable, 49% felt it’s increasingly difficult to manage fraud and minimize member friction, and financial services companies that did not track fraud by channel and payment method paid USD 3.11 for every dollar of fraud.

For mid- and large-size digital companies that allowed mobile transactions, the cost of fraud was higher — USD 3.26 for every dollar of fraud in 2018, compared to USD 3.10 in 2017. Mid- and large-size digital financial services providers that offered both international and mobile transactions experienced the highest fraud costs — USD 3.38 for every dollar of fraud, according to the data.

Identity fraud — including synthetic identities — accounted for more fraud losses than friendly fraud or account takeovers did, the study found. Among large banks, about 61% of fraud losses were due to identity fraud. Identity verification was a top online issue for financial services providers and has become a more pressing mobile concern as well.

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Keywords: LexisNexis Risk Solutions, survey, fraud costs, fraud prevention, online security, identity verification, online authentication, online security, identity fraud
Countries: World