SECURITY SOLUTIONS
FRAUD COSTS INCREASED MORE THAN 10 % OVER PRE-PANDEMIC LEVELS FOR APAC BUSINESSES
LexisNexis Risk Solutions has released the latest Asia-Pacific edition of the LexisNexis True Cost of Fraud Study , which surveyed 387 risk and fraud executives in Malaysia , the Philippines , Singapore and Thailand . The study analysed fraud trends in retail , e-commerce , financial services and lending industries and spotlights key pain points related to new digital payment methods and transaction channels .
The study found the cost of fraud rose 10 % to 16 % across APAC from 2019 prepandemic levels . The LexisNexis Fraud Multiplier determined that for every US $ 1 lost to fraud costs the organisation an average of US $ 3.99 , compared to US $ 3.50 in 2019 . The cost of fraud per transaction was higher than average , costing digital banks and alternative lenders US $ 6.33 . Other new payment channels , such as Buy Now Pay Later ( BNPL ) and digital wallets , cost businesses US $ 4.75 for every dollar lost to fraud .
Fraudsters evolved tactics in parallel with the changes in consumer behaviour brought on by the pandemic . A recent Cybercrime Report showed consumers made a significant shift to mobile transactions , which now accounts for 75 % of all transaction traffic globally . While in-person transactions remain the most popular point-of-sale channel , fraud occurs more in online channels than mobile channels . Within the mobile channel , 34 % of fraud occurs through mobile web browsers .
Fraudsters target alternative finance providers
Competition in the BNPL market is accelerating globally , led by local , homegrown players across markets , according to the study . BNPL providers recorded a 65 % jump in new account creations , which aligns with the strong growth in remote online and mobile transactions . However , BNPL providers also account for more than one-tenth of payment losses , which is disproportionately higher than the average volume of transactions through other payment channels .
Identity verification challenges
The top contributor to fraud losses for businesses remains the inability to identify synthetic identities and verifying and authenticating identities using attributes such as phone numbers , email addresses , behavioural analysis and devices . E-commerce merchants in particular find identity verification challenging since it requires finding a balance between providing a seamless customer experience and implementing step-up authentication and security measures .
Adoption of a fraud management framework
Almost all digital banks and alternative finance providers including BNPL and digital wallets have not yet fully integrated cybersecurity and operations into fraud prevention processes . Findings also show that organisations are not widely using Artificial Intelligence ( AI ) and Machine Learning ( ML ) models for fraud detection , weakening mitigation efforts . Percentage of organisations using various capabilities to fight fraud :
• Rules-based approaches – 52 %
• Crowdsourcing – 36 %
• Social media intelligence – 33 %
• Cybersecurity alerts – 25 %
• AI / ML models – 21 %
“ Fraud is sophisticated and evolving exceedingly fast . We are seeing a high volume of fraud attempts following a continued shift towards digital channels spurred by the pandemic ,” said Thanh Tai , Director of Fraud and Identity Strategy , LexisNexis Risk Solutions . “ This means businesses must integrate a fraud detection and prevention approach with both physical and digital identity attributes to enhance customer experience , stay competitive and avoid losses .” � www . intelligentfin . tech
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