As retail fraud rises, so do the average losses.According to the 10th annual True Cost of Fraud report for the retail sector from LexisNexis Risk Solutions, overall retail fraud attempts have doubled year-over-year and tripled since 2017.
The study also found merchants pay $3.13 per lost dollar on average, up 6.5% from $2.94 in 2018. Extra costs result from expenses related to chargebacks, fees, merchandise redistribution, labor/ investigation, legal prosecution and IT/software security.
As a percentage of revenue, fraud cost the average retailer 1.86% of their annual revenue in 2019, compared to 1.8% in 2018 and 1.47% in 2016. In addition, retailers face a significant fraud threat from automated botnet attacks. Only 56% of respondents were able to give an estimate of botnet activity. On average, those respondents said fraudulent botnets represented 7.1% of their monthly transactions, and 33% said botnet activity has grown since 2018.
Furthermore, the study reveals that retailers that conduct international transactions and allow m-commerce experience a large number of monthly fraud attempts. On average, mid/large-sized retailers with m-commerce and international commerce experienced 3,157 fraud attempts per month, including 1,830 prevented attempts and 1,327 successful attempts. Mid/large-sized e-commerce retailers with m-commerce and international commerce experienced 1,434 fraud attempts per month, including 767 prevented attempts and 667 successful attempts. Small retailers with… Chain Store Age