The cost of fraud in the US has increased by between 6.7% and 9.9% compared with before the pandemic, LexisNexis Risk Solutions report claims.
The finding comes from LexisNexis’ fifth edition of the LexisNexis® True Cost of Fraud™ Study: Financial Services & Lending. It examines the top fraud trends in the US and Canada and is based on responses from over 500 risk and fraud management executives.
Its findings claims that every $1 of fraud loss now costs US financial services firms $4, compared to $3.25 in 2019 and $3.64 in 2020. As for US lenders, it now costs $4.16 per $1, up from $3.90 in early 2020.
One of the biggest fraud trends last year was mortgage lending. The report claims mortgage lenders were seriously impacted, with fraud costing firms 23.5% more than before the pandemic. Large mortgage lenders have experienced increased numbers of attacks and every $1 of fraud costs them around $4.40, it said.
Another area targeted by criminals are the mobile channel. As these mobile devices have become more popular for transactions, more criminals have targeted the channels. The report states US banks and credit lenders have experienced a 10% increase in fraud in this sector.
Finally, there has been a rise in fraud across the customer journey. LexisNexis’ report claims identity verification has become a big challenge for firms. Banks have also had to balance fraud detection processes with customer friction, ensuring they can identify malicious bots and fraud, without hindering user experiences.
LexisNexis Risk Solutions director of fraud and identity Christopher Schnieper said, “Fraud prevention must assess both physical and digital identity attributes as well as the risk of the transaction. It is difficult for even the best trained professional to detect the increasingly sophisticated crime occurring in the remote digital channels without the aid of solutions that detect digital behaviours, anomalies, device risk and synthetic identities.
“According to the study, the financial services and lending firms doing this – along with fully integrating cybersecurity operations, the digital customer experience and fraud prevention – tend to have a lower cost of fraud and fewer challenges.”
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