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Businesses and financial institutions need to invest in robust security technology to prevent the high cost of fraud, according to the latest study by LexisNexis Risk Solution.
The study found that the cost of fraud for retail, ecommerce, and financial institutions in Australia is high.
The LexisNexis Fraud Multiplier, which indicates the total amount of loss a firm incurs based on the actual US dollar value of a fraudulent transaction, shows that the cost per transaction in Australia was US$3.51. Financial institutions in Australia tend to incur higher costs, with the cost of transaction hitting US$3.78.
Three factors can be attributed for the high cost of fraud. These include market events influencing the use of transaction channels and payment methods, the challenges businesses face when assessing fraud, and the less optimal approach they take towards fraud detection and prevention.
Cameron Church, director of fraud and identity, LexisNexis Risk Solutions, said the increasing cost of fraud reflects the need for these financial institutions to adapt up-to-date and multi-layered measures to prevent fraud as sophisticated threats continue to increase.
"A successful fraud detection and prevention approach involves an integration of technology, cybersecurity and digital experience programs to address unique risks from different transaction channels and payment methods," he said.
Church said undertaking a more complete assessment that combines physical and digital identity data analysis is an effective way to address fraud across various channels and transaction types.
"Using different solutions to support fraud detection at various points throughout the customer journey will strengthen a firm’s overall defence," he said.
