LexisNexis study: retail fraud is escalating at an unprecedented pace

The LexisNexis Fraud Multiplier, which measures the cost for each dollar of fraud loss, found that in 2018, every dollar of fraud cost merchants USD 2.94, up from USD 2.77 a year ago, a 6% increase. The report also found the volume of successful and thwarted fraudulent attempts rising steeply at the companies surveyed—from a monthly average of 238 to 306 successful fraudulent transactions, year-on-year, and from 257 to 313 prevented fraudulent transactions.

Mobile commerce continues to be the sector most susceptible to fraud, particularly with identity fraud. Mid- to large-size mobile commerce merchants that sell digital goods see 39% of the fraud losses from identity theft, including synthetic identities. Though these merchants appear to have shown signs of investing in fraud prevention solutions in the past year, many still struggle with identity fraud.

Digital goods merchants who layer core, identity and fraud transaction solutions have lower fraud costs (USD 2.88 for every USD 1 of fraud) than those that use only a limited set of core solutions (up to USD 3.61 per USD 1 of fraud).

The LexisNexis Fraud Multiplier has risen most sharply, year-on-year, among those selling digital goods through the mobile channel. For every USD 1 of fraud, mid- to large-mobile commerce merchants selling digital goods are hit with an average cost of USD 3.29, as opposed to their physical goods-only counterparts at USD 2.78.

The study targeted US retailers with a comprehensive survey of 703 risk and fraud executives conducted during March 2018. Respondents represented all channels, company sizes, industry segments, and payment methods.