The latest study by LexisNexis Risk Solutions reveals that some 80% of Australian firms observe fraud affecting their customer conversion rates significantly. The research report, named The 2023 LexisNexis True Cost of Fraud Study - Asia Pacific, has found that for every Australian dollar lost to fraud, companies incur an average cost of AUD$3.68.
It has been noted that over the past year, instances of fraud have increased for 66% of businesses in Australia. These costs stretch beyond simple financial losses, encompassing such expenses as internal labour, external expenses, legal expenses, and recovery fees. Additionally, replacing or redistributing misplaced or stolen merchandise can contribute towards the considerable financial burden that businesses face.
Across the Asia Pacific region, the study reveals that digital channels have become a hotspot for fraudulent activity, accounting for 51% of total fraud losses. Cybercriminals are manipulating the anonymity provided by digital, cross-border transactions to effect fraud swiftly and untraceably. The rising popularity of digital banking and commerce has seen new account creation becoming the stage of the customer journey most fraught with high fraud losses, presenting a significant challenge for financial institutions and retailers alike.
Discussing the evolving nature of crime, Konstantin Poptodorov, Director Market Planning for Australia and New Zealand at LexisNexis Risk Solutions, noted: "New forms of fraud clearly increase the risk of financial losses for consumers and businesses, including both the direct and consequential expenses, such as staff time to investigate incidents." Poptodorov points out the real problem is the 'fraud multiplier effect', where the losses experienced by organisations continue to increase and far exceed the lost face value in any transaction.
The report contains several key findings about the current state of fraud in the Asia-Pacific region. One of the most significant points highlighted is the influence of fraud on customer perceptions and interactions with businesses. It reports that 79% of Australian organisations have noticed a palpable impact on customer conversion owing to fraud - a rate slightly higher than the 75% recorded across the Asia Pacific.
As fraudsters constantly innovate, businesses have to evolve fraud management practices accordingly. The dynamic nature of criminal behaviour means that businesses must remain vigilant against new forms of fraud and attendant costs. Escalating trends of identity theft, scams, and digital wallet fraud have been observed in financial institutions. The retail sector, too, has to remain cautious, as new payment methods provide fraudsters with opportunities to exploit potential vulnerabilities.
In light of the rising threat of fraud and cybersecurity dangers, organisations are being urged to embrace innovative fraud management and authentication solutions. These solutions may include the utilisation of cutting-edge technologies such as artificial intelligence, machine learning, and biometric and behaviour-based authentication methods.
