ATLANTA, Nov. 13, 2018 /PRNewswire/ -- LexisNexis® Risk Solutions has released its fourth annual LexisNexis® Fraud Mitigation Study, which revealed a noticeable increase in the number of organizations encountering fraud committed across multiple industries. For the first time since the study's inception, there was a five-point jump with 89 percent of fraud professionals now reporting cases of cross-industry fraud (compared to 84 percent in 2017). As a result, fraud mitigation professionals are increasingly interested in teaming together and sharing data to help combat the trend.
The fourth-annual study, which surveyed more than 800 fraud mitigation professionals from five industry sectors and government, tracks the prevalence and cost of fraud that is connected to more than one industry. For instance, someone falsifying tax returns may also be falsifying mortgages, automobile insurance claims, health care claims or human services benefit claims.
"Cross-industry fraud cases are statistically speaking much more expensive for organizations than fraud that happens due to one isolated event," said Vikram Dhawan, Senior Director of Product Management for Identity and Fraud at LexisNexis Risk Solutions. "The vast expense from these complex cases in turn raises the cost of services for every consumer. Our study shows that the volume and cost of cross-industry fraud is increasing, so it's in the best interest of organizations to work together to share information and available data in the interest of prevention. By doing so, fraud can't be used as a competitive advantage because sooner or later it impacts everybody."
The financial repercussions of cross-industry fraud cases are increasing, the study suggests. Eighty percent of organizations report that these cases had a moderate-to-high financial toll (up from 78 percent last year), with more than half causing extreme/high financial impact. Some industries suffer worse than others. Fraud mitigation professionals from financial services and insurance organizations see the most cross-industry fraud, with financial services organizations experiencing the highest financial impact (59 percent), compared to 43 percent for the communications industry, which sees the least financial impact.
The Fraud Threat from Stolen Identities
In addition to gauging cross-industry fraud patterns over time, the Fraud Mitigation Study also looks at general fraud trends, with a focus this year on fraud that results from compromised identities. The 2018 findings showed that identity theft (47percent) continues to be the fraud scheme of greatest concern to fraud mitigation professionals (up 6 points from last year). It also was identified as the type of fraud scheme that most professionals (18 percent) said to have increased for their organizations year over year.
Identity theft is often facilitated with personally identifiable information obtained in a data breach. The rise of high-profile data breaches in recent years was also a contributing factor to fraud prevalence, many respondents said. In total, 40 percent of organizations said that they experienced an increase in fraud due to these breaches, with 45 percent of financial services and 44 percent of healthcare organizations most often agreeing.
As such, the study found that the majority of organizations (62 percent) have taken additional steps to protect their customers from identity fraud in the past year, and roughly half of these organizations have also increased the use of data analytics and verification against a list of known compromised identities. Similarly, organizations are spending more resources trying to prevent suspicious transactions (40 percent) rather than to prioritize safe transactions (25 percent).
Other key findings in the 2018 Fraud Mitigation Study include:
- Data analytics usage - Over three-quarters of those surveyed are using both external data and analytics solutions in their fraud mitigation programs. Fraud mitigation professionals are primarily using behavioral analytics, continuing the shift away from more rudimentary data analytics methodologies like business rules or ad hoc database searches.
- Customer interactions – When asked in which customer interactions are they seeing the most fraud, nearly half said fraudulent claims and refunds (49 percent) were the top incidents, followed by servicing customers (44 percent) and application/underwriting fraud (25 percent).
- More transactions move online – When asked if more of their organization's transactions and services moved online over the past three years, a majority (60 percent) said yes, with healthcare and financial services organizations seeing the most online movement (67 percent each).
- Spending priorities – Organizations are targeting investments in several key areas to fight fraud. While these areas vary widely by industry, technological systems are seeing the most investment across industries (24 percent), followed by training (20 percent) and investing in more staff (19 percent).
To learn more about the key findings, read the 2018 LexisNexis Fraud Mitigation Study.
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 www.risk.lexisnexis.com, and www.relx.com.
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