ATLANTA and LAS VEGAS, Oct. 29, 2019 /PRNewswire/ -- LexisNexis® Risk Solutions today released its 2019 True Cost of Fraud™ study for the US financial services and lending sectors. The study revealed that fraud continues to rise, with fraudsters targeting a broader set of firms than ever before.
For every dollar of fraud loss, financial services companies now incur $3.25 in costs (losses related to the transaction face value for which firms are held liable, plus fees and interest incurred, fines and legal fees, labor and investigation costs and external recovery expenses), up from $2.92 in 2018. This represents an 11.3% year-over-year increase. Lenders see $3.44 in costs for every dollar of fraud loss, up from $3.05 in 2018, a 12.8% increase. Banks and credit lenders, in particular, were found to have the highest costs of fraud, with both percentages jumping double digits since last year – 17% and 16%, respectively.
A number of trends were found to contribute to increased fraud risk for financial services and lending institutions. These are driven, in part, by a stronger focus from these institutions on optimizing the customer experience with faster and lower friction transactions, especially from digital banks and lenders (those that receive 50% or more of transactions through the online and/or mobile channel).
"The trends we have identified represent the challenges surrounding identity verification and authentication while trying to provide a smooth customer experience," said Kimberly Sutherland, vice president, fraud and identity management strategy, LexisNexis Risk Solutions. "However, firms utilizing a multi-layered solution approach could realize up to an approximate 30% decrease in their cost of fraud, which is significant. And with digital identity intelligence and behavioral biometrics layered in, firms can expect to lower the true cost of fraud even further."
The report's findings are based on a comprehensive survey of 205 risk and fraud executives in financial services and lending companies, including retail and commercial banks, credit unions, investments, trusts and wealth management, as well as auto lenders, mortgage companies, finance companies, and non-bank credit card and personal loan issuers.
Download the 2019 True Cost of Fraud study here. Join Kim Sutherland on November 14, 2019 for a webinar on Uncovering the True Cost of Fraud and How to Fight Back.
Visit LexisNexis Risk Solutions in booth #4518 at the Money 20/20 October 28 through October 30, 2019.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based and analytics and decision tools for professional and business customers across industries. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
SOURCE LexisNexis Risk Solutions