Report: Revenue Lost to Fraud Continues to Rise for CNP Merchants

Sept. 17, 2015

Report: Revenue Lost to Fraud Continues to Rise for CNP Merchants October 1 has been seen as a sort of Waterloo in card-not-present circles. While it marks the start of what could be a significant increase in CNP fraud, revenue lost to fraud has already markedly increased in 2015, according to the results of a new study from LexisNexis. The company’s annual True Cost of Fraud study found m-commerce and large e-commerce merchants lost 1.68 percent and 1.39 percent of their revenue respectively to fraud in 2015. For large e-commerce merchants, that represents a 64 percent increase from 2014 and for m-commerce merchants, revenue lost this year rose 24 percent.

The tedious and expensive manual review process continues to drive costs, despite a significant increase in the use of automated systems to identify potentially fraudulent transactions. Nearly half of transactions flagged using automated systems are still submitted for manual review, the report found. And, the process generally hogs about a quarter of the budget allocated to fraud prevention.

“Manual reviews are time-consuming and expensive, driving more costs into the business and causing customer friction, which can impact overall top-line revenue,” said Dennis Becker, vice president, Corporate Markets, LexisNexis Risk Solutions. “To address both issues, analyzing the solutions and decisions that contribute to the need for manual reviews is critical.”