The 5th annual LexisNexis True Cost of Fraud Study was recently released. Fraud is quite costly for merchants — in terms of both lost sales and consumers’ reluctance to shop at retailers where they have been burned.
According to the report, commissioned by LexisNexis and conducted by Javelin Strategy & Research:
” Nearly one in three victims of identity fraud chose to avoid specific merchants after falling victim to fraud. Between ten and 14 million U.S. consumers are victims of identity fraud every year.”
“The study uses the LexisNexis® Fraud Multiplier(SM) to calculate the ‘actual cost’ of fraud incurred by retailers. It calculates the total cost of fraud shouldered by merchants. Merchants not only incur the amount of chargebacks for which their company is held liable, but they also may pay fees and interest to financial institutions and pay to replace and redistribute lost or stolen merchandise.”
“This year’s findings reveal merchants are paying more per dollar of fraud than in 2012, the most since 2010. More specifically, merchants are incurring a $279 loss for every $100 of fraud losses. The increase is attributed in part to the growth in fraud activity through online channels, already the most expensive channel due to costs associated with fees and interest owed to financial institutions, charge-backs, and other replacement costs.”
Click the image to access the FULL report.