Fraud costs, volumes increase during pandemic
Criminals target mobile channels due to consumers’ increased use.
Fraud costs and attack volumes remain significantly higher today than before the coronavirus pandemic, according to the LexisNexis® True Cost of Fraud™ Study: Financial Services & Lending.
The study found that the cost of fraud for U.S. financial services and lending organizations has increased between 6.7% and 9.9% compared with before the pandemic, which started significantly impacting the U.S. in early 2020.
Every $1 of fraud loss costs U.S. financial services firms $4, compared to $3.25 in 2019 and $3.64 in 2020.
Mortgage lenders have been seriously impacted by fraud, with mortgage fraud costs now 23.5% than just before the pandemic hit in early 2020.%.
Other key findings of the study include:
- Criminals have targeted the mobile channel for fraud during the pandemic as more transactions take place through this channel. More than half of the study’s respondents reported a 10% or greater increase in mobile channel fraud in 2021.
- Fraud losses occur across the customer journey, but the point of funds distribution is often the most susceptible to fraud. New account creation is also susceptible, while identify verification is a challenge in online and mobile channels.
- More complex fraud means there can be multiple risks with no single solution. Therefore, successful fraud prevention must address the physical identity attributes, digital identity attributes, and the risk of the transaction.
“With the accelerated movement to online/mobile transactions and payments, financial services and lending firms must continue to build out and enhance the digital customer experience while protecting against fraud,” says Christopher Schnieper, LexisNexis Risk Solutions director of fraud and identity.
“It is difficult for even the best trained professional to detect the increasingly sophisticated crime occurring in the remote digital channels without the aid of solutions that detect digital behaviors, anomalies, device risk, and synthetic identities.”