Merchants incur a USD 279 loss for every USD 100 of fraud losses – study

According to the 5th Annual LexisNexis True Cost of Fraud study, the increase is partially determined by the growth in fraud activity via online channels which are already the most expensive due to costs associated with fees and interest owed to financial institutions, charge-backs and other replacement costs.

The findings of the study reveal that nearly one in three victims of identity fraud chose to avoid specific merchants after falling victim to fraud. Moreover, between 10 and 14 million US consumers are victims of identity fraud on a yearly basis.

The study highlights that after a decline in both incidence rate and total fraud between 2009 and 2010, in 2012, identity fraud has increased with 12.6 million victims and USD 21 billion in total fraud.

Identity fraud has jumped from 12 percent of all of fraud in 2012 to 17 percent in 2013 for all merchants but remained stable (although high) at 21 percent for international merchants. Large e-commerce merchants who view fraud prevention as being too expensive experience a higher fraud rate (74 percent) than those who do not (0.39 percent).

The study also indicates that merchants have lost a lower portion of revenue to fraud this year, 0.51 percent, compared to 0.54 percent in 2012. Moreover, large e-commerce merchants use five versus two fraud solutions, which is more than any other retail category.

The study was commissioned by LexisNexis and conducted by Javelin Strategy & Research, via an online survey using a merchant panel comprising 1,139 risk and fraud decision-makers and influencers.