Online fraud attacks are outpacing pre- and early pandemic levels, according to a new study by LexisNexis Risk Solutions.
U.S. retailers now suffer 1,740 attacks per month — up from 1,515 in 2020 and 1,384 in 2019, the report states.
But U.S. ecommerce firms have seen an even more significant increase, from 344 a month last year to 824 in 2021 — roughly a 140% increase. In Canada, ecommerce brands have seen a 52% increase.
The increase in online fraud can be attributed to the digital transformation during the pandemic, the report says.
Moreover, every $1 worth of fraud now costs U.S. retail and ecommerce merchants $3.60 compared to $3.13 prior to the pandemic — a 15% increase from a pre-pandemic survey and a 7.1% increase since the 2020 survey conducted during the pandemic.
Alarmingly, the percentage of successful monthly attacks is now roughly the same as those that are prevented: 50%, compared to a 48%-52% differential in 2020.
The top online fraud challenges are certification of customer identity (47%), balancing fraud prevention with customer friction (35%) and address verification (33%).
In addition, 56% of U.S. merchants are now having moderate to significant challenges with third-party payment transactions, up from 36% in 2020.
The three top mobile challenges are verification of customer identity (40%), balancing fraud prevention with customer friction (31%) and email or device verification (29%).
The lesson? “We should all assume that the accelerated movement to online/mobile transactions and payments spurred by the pandemic will continue as the preferred method for transacting,” states Kimberly White, senior director, fraud and identity, LexisNexis Risk Solutions. “This means businesses must continue to build out and enhance the digital customer experience while protecting themselves against fraud.”
White continues, “Organizations can no longer rely on manual processes and thin technologies to minimize fraud and reduce challenge rates, manual reviews and costs.”