18 Apr LexisNexis Risk Solutions True Cost of Fraud Study finds startling results

LexisNexis® Risk Solutions has recently released the results of its 2023 LexisNexis® True Cost of Fraud™ Study, which focuses on the EMEA region.

According to the study, businesses in Africa now face a cost of fraud that is 3.90 times the face value lost in fraudulent transactions.

The study also reveals that in the African region, digital channels account for 52% of overall fraud losses, surpassing physical fraud for the first time.

The rapid adoption of digital payments has led to the exposure of numerous systems and channels to more innovative fraud attacks. The anonymity of digital, cross-border transactions is exploited by cybercriminals to execute fast and untraceable fraud.

The study highlights the evolution of criminal tactics, with synthetic identities identified as the primary challenge in customer identity verification, as reported by 52% of businesses in EMEA.

Fraud remains a widespread problem for businesses, not only impacting financial resources but also overall operational efficiency, customer trust and reputation.

In Africa, 47% of companies surveyed reported an increase in fraud in the 12 months before the survey. The study reveals that organisations incur an average cost of $3.93 for every dollar lost to fraud.

These costs encompass financial losses due to fraud, as well as internal labour expenses, external costs, interest and fees, along with the expenses associated with replacing or redistributing lost or stolen merchandise.

The study emphasizes that forward-thinking fraud management and authentication solutions, leveraging the capabilities of technologies such as AI, machine learning, biometric and behaviour-based authentication methods, are essential to combat the rising threat of fraud and cybersecurity risks.

The True Cost of Fraud Study – Europe, Middle East and Africa surveyed 1,845 global fraud management decision-makers at financial institutions and retail companies, including participants from African countries. The study leverages data and analysis to understand the current state of fraud and the challenges associated with digital payments in emerging markets. The study was conducted by Forrester Consulting on behalf of LexisNexis Risk Solutions in August 2023.