The average number of successful fraudulent transactions per month continues to rise, along with the average cost per each dollar of fraud loss, according to a recent LexisNexis Risk Solutions survey of more than 700 risk and fraud executives from the retail sector.
Survey respondents reported a monthly average of 306 successful fraudulent transactions when the survey was conducted this past March, up from 238 the year before. Survey results also showed an average of 313 failed fraud attempts per month, an increase from 257 a year earlier.
The report also tracked the cost for each dollar of fraud loss, finding that every dollar of fraudulent transactions cost merchants $2.94, up from $2.77 a year ago, a year-over-year increase of 6%.
While looking for a bright spot in these numbers, one might argue that at least retailers and other merchants are able to prevent the majority of attempts at fraudulent transactions. Mathematically, that is true, but it has also been true every year for the last seven years this research has been conducted. However, the success rate in blocking fraud attempts for the retailers studied by LexisNexis has held pretty steady — at barely over 50% for most of those years.
What hasn't remained the same? For starters, the monthly average of reported fraud transaction attempts back in 2012 was 170. It has increased every year since, and this past March, that number stood at 619 for the previous study period, having leaped upward from 495 since the 2017 survey.
The level of fraud cost as a percentage of a merchant's total revenue has also increased every year since 2012, and jumped from 1.58% in the 2017 study to 1.8% in the 2018 study, a rise of almost 14%. The cost per dollar of fraud loss measured by the LexisNexis Fraud Multiplier — $2.94 — has also been on the rise every year since 2015. Interestingly, it was measured at a whopping $3.08 in 2014, and fell down to $2.23 the following year.
In addition, and as noted earlier this year by the AppsFlyer State of Mobile Install Fraud report, fraud targeting mobile commerce applications has jumped as more transactions have been conducted via mobile. LexisNexis reached a similar conclusion, saying in the report that mobile commerce continues to be the sector most susceptible to fraud.
This is especially true among mid-sized and large mobile commerce players selling digital goods via mobile. Average cost per dollar of fraud loss for this particular group stood at $3.29, while the figure for mobile players selling only physical goods was $2.78. LexisNexis said these merchants have been hit particularly hard by identity fraud, which the company said highlights the importance of deploying layered fraud solutions that address all types of fraud.