NEW YORK--(BUSINESS WIRE)--U.S. merchants are incurring $191 billion in fraud losses each year, according to a new report released today by LexisNexis® Risk Solutions. Among the findings, the 2009 LexisNexis® True Cost of Fraud Benchmark Study discovered that merchants must absorb nearly 10 times the identity fraud cost incurred by financial institutions. Retail merchants experience a massive $100 billion in losses solely attributed to identity fraud, which escalates to $191 billion when factoring in the additional cost of lost and stolen merchandise. The study also found that merchant fraud losses amounted to more than 20 times the total value of consumer fraud victim losses which totaled approximately $4.8 billion in 2008.
Developed in conjunction with Javelin Strategy & Research, the study examines how U.S. retail fraud affects merchants, financial institutions and consumers. The full study is available on the LexisNexis® Risk Solutions Web site at: www.risk.lexisnexis.com.
“The impact of retail fraud is multifaceted and far-reaching, as this crime claims multiple victims,” said Dennis Becker, LexisNexis Risk Solutions vice president, corporate markets. “We are seeing significant increases in identity fraud overall as well as increases in typical fraud categories such as chargebacks,” said Becker. “With the economic downturn and increasing sophistication in criminal fraud methods, it is crucial that merchants and financial institutions work together to mitigate fraud.”
According to the study, retail merchants are absorbing the vast majority of the costs associated with fraud. Among the numerous fraud types affecting merchants, identity fraud or fraudulent transactions made up the bulk of fraud from a cost standpoint, representing 52 percent of total fraud losses. In addition, certain merchant segments revealed a higher prevalence of fraudulent transactions such as large eCommerce retailers, of which 40 percent saw an upsurge. Digital goods merchants attributed 54 percent of their fraud loss to unauthorized purchases, while merchants in telecom, social networking industries and online gaming reported 64 percent to 67 percent of their total annual fraud loss as the result of identity fraud.
The report also found that:
“By taking a careful assessment of current fraud prevention tools and technologies and seeking out more education and information, merchants can help to mitigate and detect fraudulent transactions,” said James Van Dyke, president of Javelin Strategy & Research.
In early 2009, LexisNexis Risk Solutions retained Javelin Strategy & Research to deploy a comprehensive quantitative study on the effects of retail fraud. A 29-question online survey was sent to a retail merchant panel comprising 1,009 risk and fraud decision-makers and influencers. The merchant panel includes individuals from companies of all sizes, industry segments, channels and payment methods. The study also draws on identity fraud victim data from a telephone interview survey of more than 4,800 U.S. adults including 487 fraud victims representative of the U.S. population. The Merchant Risk Council (MRC) also provided input and comment on the study prior to its release.
“The MRC is working with a wide variety of multi-channel and e-Commerce merchants with the stated mission of mitigating losses stemming from card-not-present fraud,” said Tom Donlea, MRC Executive Director. “Research programs such as this are valuable to the merchant community looking to benchmark their verification and authentication processes and fraud prevention tools that thwart such nefarious activity.”
About Javelin Strategy & Research
Javelin provides superior direction on key facts and forces that materially determine the success of customer-facing financial services, payments and security initiatives. Our advantages are rigorous process, independent position, and expert people. For more information about this or other Javelin reports, please visit www.javelinstrategy.com/research or contact Elizabeth Travers at (925) 225-9100 ext. 31 or firstname.lastname@example.org.
LexisNexis® (www.lexisnexis.com) is a leading global provider of content-enabled workflow solutions designed specifically for professionals in the legal, risk management, corporate, government, law enforcement, accounting and academic markets. LexisNexis originally pioneered online information with its Lexis® and Nexis® services. A member of Reed Elsevier [NYSE: ENL; NYSE: RUK] (www.reedelsevier.com), LexisNexis serves customers in more than 100 countries with 18,000 employees worldwide.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions is the leader in providing essential information that helps advance industry and society. Building on the legacy of proven LexisNexis® services from the past 30 years, our cutting-edge technology, unique data and advanced scoring analytics provide total solutions that address evolving client needs in the risk sector while upholding high standards of security and privacy. LexisNexis Risk Solutions serves commercial organizations and government agencies and is comprised of several affiliated corporations, each offering premier customer-focused solutions. For more information, visit risk.lexisnexis.com.