A new study reveals that mobile transactions are a significant driver of e-commerce fraud costs in North America, with merchants facing increasing financial pressures from fraudulent activities. According to the LexisNexis True Cost of Fraud study, U.S. merchants now incur an average cost of $4.61 for every dollar of fraud, while Canadian merchants face a slightly lower cost of $4.52. The costs include not only the lost transaction value but also fees, interest, merchandise replacement, and labor associated with fraud investigation and recovery.
Mobile transactions, including digital wallets, peer-to-peer payments, and QR codes, represent 33 percent of fraud costs in the United States and 41 percent in Canada. The U.S. e-commerce segment specifically reports that 53 percent of fraud costs are tied to online purchases, with 30 percent attributed to mobile channels. The findings support previous cybercrime reports showing a steady increase in mobile-based attacks.
The study identifies significant operational impacts beyond direct financial losses. Sixty-three percent of respondents report increased customer churn due to fraud, while 64 percent note negative effects on customer conversion rates. The challenges are compelling businesses to allocate additional resources to fraud management, particularly as mobile payment adoption continues to accelerate.
Despite the growing sophistication of fraud threats, 41 percent of North American merchants continue to rely on manual processes for fraud prevention, rather than adopting advanced tools such as AI models, behavioral biometrics, and third-party detection systems. The resistance to modernization persists even as financial institutions and technology providers increasingly integrate AI-powered fraud detection solutions into their security frameworks.
Identity verification remains a particular challenge, especially during customer onboarding. The study indicates that 41 percent of U.S. businesses face significant difficulties with identity verification during new account creation, compared to 36 percent for purchase transactions and 37 percent for account logins. Recent developments in remote identity verification standards may help address these challenges.
“Rising fraud costs strain businesses financially and damage customer trust,” said Maanas Godugunur, Senior Director of Fraud and Identity at LexisNexis Risk Solutions. “Staying ahead of fraudsters requires AI-powered fraud detection and a multi-layered approach that identifies fraud in real time while safeguarding the customer experience.”
The findings come as LexisNexis Risk Solutions continues to expand its fraud prevention capabilities, having recently acquired IDVerse, an AI-powered document authentication and fraud detection solutions provider, to enhance its digital identity verification offerings.
Sources:Mass Market Retailers, Booking.com, Albert Help Center, Better Business Bureau
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