Study: Mobile Driving Cost of Fraud Higher, Large E-Commerce Retailers Hardest Hit

Sept. 18, 2014

Study: Mobile Driving Cost of Fraud Higher, Large E-Commerce Retailers Hardest Hit As retailers continue to expand their mobile commerce capabilities, fraud, and the costs associated with it, are being driven higher as well, according to the results of a new study from LexisNexis Risk Solutions. In its 2014 True Cost of Fraud Study , the sixth annual version of the report, LexisNexis found every $100 in fraudulent transactions actually cost a merchant $308, up from $279 last year. Mobile has been a key driver in the increase in overall fraud costs, the study found, with every $100 of fraud in the mobile channel costing retailers $334.

“There is a significant amount of money at risk for retailers,” said Dennis Becker, LexisNexis Risk Solutions vice president.  ”As retail buyer behavior shifts to other channels, like mobile, it’s important for merchants to strike a balance by having the right tools in place that reduce customer friction while helping prevent fraud.”

The report also found that successful fraudulent attempts rose 46 percent this year compared to 2013, which resulted in the percentage of revenue being lost to fraud overall increasing from .51 percent to .68 percent. Large e-commerce merchants were hardest hit by this metric: their revenue lost to fraud jumped from .53 percent to .85 percent. According to the authors, the increase ties directly back to a decrease in the protective measures these merchants are taking.

“Even though their general fraud awareness and use of existing fraud solutions is high compared to all merchant categories,” LexisNexis said, “large e-commerce companies have reduced the number of fraud solutions that they use: four solutions in 2014 versus five solutions in 2013.”