Every $1 of Fraud Costs US E-Commerce Merchants $3.60

Every $1 of Fraud Costs US E-Commerce Merchants $3.60

August 26, 2021

Every $1 lost directly to fraud by U.S. e-commerce retailers actually costs them $3.60, according to Lexis Nexis Risk Solutions’ (LNRS) annual True Cost of Fraud Study for 2021. That’s up seven percent from last year during the pandemic and 15 percent higher than the last pre-pandemic measurement in 2019.

Atlanta-based LNRS also found the True Cost of Fraud multiplier has breached the $3 mark for Canadian retailers, rising 5.2 percent from last year to $3.02.

For the last 12 years, LNRS has calculated a multiplier—taking factors such as chargeback fees, restocking costs and interest into account in addition to the cost of the stolen goods—enabling merchants to more accurately gauge how much e-commerce fraud affects the bottom line of online merchants. The answer for much of the study’s existence? Significantly. And the researchers expect costs to continue to grow.

“Retailers should anticipate and prepare for increased fraud in the foreseeable future, even as we see a light at the end of the global pandemic tunnel,” said Kimberly White, senior director of fraud and identity for LexisNexis Risk Solutions. “We should all assume that the accelerated movement to online/mobile transactions and payments spurred by the pandemic will continue as the preferred method for transacting. This means businesses must continue to build out and enhance the digital customer experience while protecting themselves against fraud.”

Additional findings in the report include:

  • Fraud soared along with online transactions during the pandemic. U.S. merchants polled in the study reported an average increase in fraud attacks of 140 percent since 2020. Successful attacks rose 52 percent. Canadian businesses fared better, with all fraud attacks surging “only” 52 percent, while successful attacks increased 45 percent.
  • U.S. retailers use eight fraud prevention solutions, while Canadian merchants use an average of five.

Download the True Cost of Fraud Study for 2021.

Previous-Article-CNP  Next-Article-CNP

CNP Virtual Summit Registration


  • Share this Article:
DJ Murphy

Lastest Fraud News