LexisNexis: Fraud Remains A Significant Challenge

Market researcher LexisNexis Risk Solutions has released its “2017 True Cost of Fraud” report, which determined that product companies transacting through remote channels are hit hardest by fraud.

Based on about 1,200 risk and fraud executives across industries, the study looked at the total amount of loss a business incurs based on chargebacks, fees, interest, merchandise replacement and redistribution. The survey this year determined that, for every dollar of fraud to merchants and firms in the sectors covered, company cost is about $2.66 on average. For organizations selling digital goods and/or primarily transacting through remote channels, the fraud cost is $3.48 on average.

LexisNexis estimated that fraud cost as a percentage of revenues, as reported by survey respondents, is 1.9% across retail, e-commerce, financial services and digital lending businesses. Businesses that sell digital goods and/or conduct transactions through remote channels primarily suffer a proportional fraud cost of about 2.51% of revenues.

Paul Bjerke, vp/fraud and identity management strategy, LexisNexis Risk Solutions, said, “While 2% may not sound significant, the impact can be tremendous when you’re talking about a multi-million dollar company. Businesses need to be aware of the issue and proactive measures they can take to protect their bottom lines.”