Lexis Nexis Study: The True Cost of Fraud

• Every $1 of fraud for which a merchant is held liable costs US retail and ecommerce merchants $3.75, which includes the costs related to fees, interest, merchandise replacement and redistribution. This is 19.8% higher than the pre-Covid study in 2019 and 4.2% higher than in 2021. For ecommerce merchants alone, the cost of fraud is $3.85.
• For Canadian retail and ecommerce merchants the cost of fraud has also increased.  At $3.19, it is up 11.1% since 2020. The cost of fraud for Canadian ecommerce merchants alone is $3.45.
• The mobile channel is driving the increased fraud. Year-over-year changes in average monthly attack volume are relatively unchanged for merchants that do not allow mobile commerce, but attack volume is up 52% in the U.S. and 101% in Canada for merchants that do allow mobile commerce.
• US retailers and ecommerce merchants are getting hit the hardest by malicious bot attacks, with 40% of US retailers experiencing an increase in bot attacks over the past 12 months.
• Friendly/first-party and third-party/synthetic-identity fraud are driving retail and ecommerce fraud losses across the customer journey, which the study defines as establishing an account, followed by making a purchase and accessing an account.
• Merchants that employ a robust approach to fraud detection and prevention, including layering specific solutions at different points in the customer journey, experience fewer successful fraud attacks per month.

A free copy of the study can be downloaded from the Lexis Nexis Risk Solutions’ website.