Troubling News from “True Cost of Fraud” Study

The total cost of fraud for retailers and e-commerce firms now exceeds $5 for every $1 of direct losses in both the United States and Canada, a new study from LexisNexis Risk Solutions concludes. The study, dubbed the “True Cost of Fraud,” highlights the growing financial burden of fraud and the increasing challenge of balancing security with seamless customer experiences.

“While it’s no surprise fraud continues to evolve in scale and sophistication, the challenge for retailers and ecommerce providers in North America is adapting to changing attack vectors at scale,” said Maanas Godugunur, Senior Director of Fraud and Identity at LexisNexis Risk Solutions. “Survey results are clear: organizations that take a more integrated, multi-layered approach to fraud prevention are better positioned to protect their customers, deliver superior customer experiences and, in turn, increase customer loyalty, manage risk and drive growth.”

Some notable findings from the survey:

* 37% of retail and ecommerce organizations reported significant revenue losses tied to fraud over the past year. At the same time, efforts to strengthen fraud controls are contributing to customer friction, with 56% of U.S. retailers and 54% of U.S. ecommerce merchants reporting increased customer churn linked to anti-fraud measures.

* Fraud risk is increasingly being distributed across digital and physical channels, payment types and customer touchpoints. Online and mobile channels now account for most fraud costs, representing up to 83% for ecommerce merchants. Common fraud types include chargeback fraud, lost or stolen merchandise and fraudulent returns.

* Physical and digital retailers both face emerging risks tied to the rapid growth of agentic commerce, in which AI-powered agents transact on behalf of consumers. More than two thirds of US merchants report concern about the fraud risks associated with these transactions.

In response to such challenges, “Retail and ecommerce organizations are continuing to shift toward integrated, multi-layered fraud prevention strategies that combine identity verification, device intelligence and behavioral analytics across the customer journey,” the LexisNexis report notes. “These approaches are helping organizations improve detection, reduce friction and better align fraud management with customer experience goals.”

The “True Cost of Fraud” study is based on insights from 513 risk and fraud leaders at consumer-facing organizations in the U.S. and Canada.  Click here for a link to register for a full copy of the report.