LexisNexis' study says banks and fintechs were hit hard by SMB lending fraud

LexisNexis Risk Solutions has released its latest SMB Lending Fraud Study, which reveals that this type of fraud increased 6.9% in the US since 2020.

SMB lending fraud losses account for a higher percentage of financial firms' annual revenues year-over-year at an 6.2% surge overall, with larger banks that have more than USD 10 billion in revenue and fintechs/digital lenders seeing the sharpest year-over-year increase, according to the study.

More fraud prevention costs have involved labor compared to early 2020, as lending faced growing loan requests because of the Paycheck Protection Programme and battled more fraud related to counterfeit business credentials and fake or stolen consumer identities associated with businesses applying for loans, says LexisNexis. Mobile channel fraud losses have grown 10% or more, particularly among fintechs and larger banks, as per data put forth in the study.

The results uncovered by LexisNexis illustrate the impact that the pandemic had on lending, contributing more than one-third to the costs of SMB lending fraud. Respondents indicated that the pandemic negatively impacted them through both fraud and more complexity in fraudster' methodology. Stolen legitimate business and consumer identities, as well as the use of synthetic consumer identities make it difficult for lenders to distinguish between real and fraudulent loan requests, the company added.