Fraud costs soar as cyber crooks diversify

Tech Reporter

Cybercriminals are attacking a wider set of payment methods and driving the cost of fraud to new highs, with South Africa particularly hard hit.

The latest LexisNexis True Cost of Fraud study indicates that the cost to businesses in Europe, the Middle East and Africa (EMEA) is now 3.49 times the amount of each transaction lost to fraud.

fraudulent since synthetic identities include some legitimate data.

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The LexisNexis Fraud Multiplier, an estimate of the total amount of loss a firm occurs based on the actual dollar value of a fraudulent transaction, showed an increase from 2019 data of 12.3% in Germany, 27.2% in France, 34.6% in the Netherlands and 41.5% in South Africa.

Cybercriminals also vary on how they attack transaction chains. Credit transactions accounted for nearly half of fraud losses in 2019 when looking at costs by payment method. The latest study shows that criminals have diversified. While credit transactions still account for the single most fraud losses by payment method, there has been a marked increase in losses from digital wallets and direct deposit payment methods.

It also revealed a proportional resurgence in losses from traditional payment methods such as cash, cheque or gift cards, as many economies emerge from the pandemic.

Identity verification is a growing challenge across EMEA markets, marked by increasing use of synthetic identities, which fraudsters create by using a combination of fabricated information and personal information for a real person to build a new digital identity. It is often difficult for businesses to flag these as

Director of fraud and identity at LexisNexis Risk Solutions, Jason Lane-Sellers says fraud has become more expensive for businesses because the volume of both human and bot-originated fraud continues to target transactions at scale.

“The other side of the story is that consumer transaction habits are changing and cybercriminals are adapting to these behavioural patterns. With more consumers using a variety of channels to transact, there is no one-size-fits-all solution for businesses wanting to authenticate digital identities and reduce fraud losses,” he says.

Lane-Sellers adds that businesses need a multi-layered offensive using technology and data sources to combat fraud and stave off financial losses.

“The increasing sophistication of some cybercriminals in deploying synthetic identities is one example where more robust, multi-layered solutions can dramatically reduce the risk to a transaction chain,” he says.

The study surveyed 834 risk and fraud decision makers during January and February. Respondents represented a wide spectrum of financial services and retail merchants.