ATLANTA, Oct. 22, 2018 /PRNewswire/ -- Today, LexisNexis® Risk Solutions, a part of RELX Group (NYSE:RELX), released its 2018 True Cost of Fraud℠ study on lending. The 2018 study, which surveyed 186 risk and fraud executives at various lending institutions, including mortgage companies, auto lenders, non-bank personal loan issuers, non-bank credit card issuers and finance companies, highlights the continued rise of fraud costs for U.S. lenders. According to the LexisNexis Fraud Multiplier℠, for every dollar of fraud, lenders incur $3.05 in costs, compared to $2.82 in 2017, an 8.1 percent increase. Larger digital lenders, with at least $50 million in annual revenue, are hit hardest by fraud, incurring $3.37 in costs, which is up from $3.07 in 2017.
"While the rise of digital lending has given the lending industry exciting new methods of reaching consumers, it also has brought unique fraud prevention challenges," says Kimberly Sutherland, senior director, fraud and identity management strategy, LexisNexis Risk Solutions. "Areas like customer identity verification and synthetic identity fraud are key challenges for lenders, as they seek to reduce the risk of customer friction, while still maintaining rigorous fraud and identity standards. It is crucial that lenders use not just a large number of tools in their fight against fraud, but layer in the right combination of tools."
Other key findings from the study include:
- 54 percent of risk and fraud executives at large digital lenders state that verification of customer identity is their largest challenge. This is especially true of verification through the online channel.
- Lending firms that use a multi-layered solution approach experience a lower cost of fraud. Those who layer core + advanced identity authentication + advanced transaction / identity verification solutions have lower fraud costs than others, per fraud event ($2.63 for every $1 of fraud versus up to $3.47) and as a percent of annual revenues. They also tend to have a lower volume of false positives.
- Large digital lenders with international transactions attribute nearly 40 percent of their fraud losses to their non-domestic business. Fraud that originates in Asia represents 57 percent of the total international fraud expenses for these lenders.
- Large digital lenders are more likely to represent "best-in-class" thinking about the adoption of fraud mitigation solutions, as they face attacks that are more significant.
About LexisNexis® Risk Solutions
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX Group (LSE: REL /NYSE: RELX ), a global provider of information and analytics for professional and business customers across industries. For more information, please visit https://risk.lexisnexis.com/, and https://www.relx.com/.
Jean Creech Avent, Director Public Relations
LexisNexis Risk Solutions
View original content to download multimedia:http://www.prnewswire.com/news-releases/the-cost-of-fraud-rises-8-1-percent-year-over-year-for-us-lenders-according-to-lexisnexis-risk-solutions-study-300735188.html
SOURCE LexisNexis Risk Solutions