LexisNexis Risk Solutions Study Finds 90% of Respondents Experienced an Increase in Online Fraud in the Past Year
Data from a study commissioned by LexisNexis® Risk Solutions and conducted by Forrester Consulting called Digital Payment Fraud in High Growth Markets Study has been made public. The study looks into the proliferation of digital payments and fraud attacks and asks what kinds of steps businesses are taking to future-proof their fraud management. The survey includes 326 business leaders from the financial services, media, retail, and telecommunications industries across Latin America (LATAM), Europe/the Middle East/Africa (EMEA), and Asia/Pacific (APAC).
Consumers who do most, or all of their shopping, entertainment, and banking online are prime targets for fraudsters. During the current pandemic, this has reached epidemic proportions and even spawned new types of fraud. This has led to an uptick in the importance placed on fraud prevention strategies by businesses, even as they work to improve their customers’ digital experiences in an effort to keep and attract new customers and inspire trust.
Key Results from the LexisNexis Risk Solutions Study on Digital Payment Fraud in Fast-Growing Markets
Nine out of ten respondents said their companies have seen an increase in online fraud over the past 12 months. Overall, the incidence of fraud has increased by about 37% over the same period. The rise in the popularity of alternative payment methods, such as digital wallets, QR codes, and cryptocurrencies, has resulted in a rise in the prevalence of fraud involving these payment methods. In LATAM and APAC, fake account registration fraud and scams like phishing, smishing, and vishing have seen a significant uptick.
Detecting Fraud: In Asia-Pacific, one-time passwords are widely used for authentication and fraud prevention, while in Europe, the Middle East, and Latin America, biometric authentication has been adopted as a top priority by most businesses. Nonetheless, antiquated methods of authentication like static passwords and device verification are still widely used.
Critical Obstacles: Online fraud prevention and detection face significant challenges for businesses, the most significant of which are related to privacy concerns, sub-par user experiences, the complexity of implementing relevant technologies, and the lack of effective solutions. Additionally, as consumers demand more payment choice flexibility, businesses have to implement new and emerging payment types to meet rising expectations, despite the fact that they struggle to protect customer data from the various types of sophisticated payment fraud. But only 42% of the businesses polled actually use multi-factor authentication.
Be prepared for the future: Eighty per cent (80%) of respondents worldwide anticipate an increase in fraud risk within the next twenty-four months. In the next two years, real-time payments will become standard, and businesses expect a plethora of new payment methods and business models. Since fraudsters are so good at quickly adapting their attack vectors in response to new payment methods, anti-fraud software has had to evolve at a much faster rate. More and more businesses have reported that they are raising awareness and providing ongoing training to customers and staff to help them spot and avoid fraud.
Pratik Choudhary, Manager of Fraud and Identity Strategy for LexisNexis Risk Solutions., said, “The rapid transition to digital transactions can be a double-edged sword.”
He continued, “While it significantly improves the consumer experience it has left many organisations vulnerable to fraud. Businesses need to embrace newer payment methods, including online banking and digital wallets but also prepare for the sophistication of payment fraud. With strong fraud risk management and fraud monitoring capabilities, institutions across high growth markets can reduce fraud losses, maintain customer trust and safeguard their reputation, all while preparing for new regulations.”
