Report: Every $1 of Fraud Actually Costs Merchants $2.40
May 24, 2016
Not only has the number of fraudulent transactions increased significantly for e-commerce and omnichannel merchants in the past year, the true cost associated with each dollar lost increased as well. Every dollar of fraud lost in 2015 cost merchants $2.40, up from $2.23 the year before, according to the LexisNexis Risk Solutions 2016 True Cost of Fraud Survey . To calculate fraud’s true cost to a merchant, the report calculates a multiplier based not only on the dollar value of fraud lost, but factors like the replacement, shipping, restocking and chargeback costs associated with a fraudulent order. The company officially released the results of this year’s survey today at the 2016 CNP Expo in Orlando, Fla.
The survey also focused this year on the problems associated with selling remotely via a mobile device, which generates a “disproportionate amount of fraud,” according to Aaron Press, director of e-commerce and payments for LexisNexis Risk Solutions and the report’s author. Press noted that m-commerce merchants were hit particularly hard when measuring percentage of revenue lost to fraud. M-commerce and international merchants both reported they lost an average of 1.69 percent of their revenue to fraudulent transactions.