Thursday, December 14, 2017

Retail Fraud On The Rise

According to a report released by LexisNexis, United States retailers are suffering from $ 191 billion in fraud losses every year. Actually, the average merchant will be subjected to almost ten times the identity theft of financial institutions.

The retail industry is currently suffering from $ 100 billion in losses as a result of identity theft; that number is pumped up to $ 191 billion when you factor in lost and stolen merchandise. Stores lost more than twenty times the consumer fraud losses which came to about $ 4.8 billion in 2008.

“The total impact of retail fraud is versatile and extensive as this crime claims multiple victims,” said Jacob D. Almeida, Vice President of Risk Solutions and overseer of corporate markets. “We are seeing huge increases in identity fraud overall as well as increases in the better known fraud categories like chargebacks. With the recession and increasing sophistication in criminal fraud methods, it is imperative that merchants and financial institutions work together to cut back on fraud.”

Here’s the skinny on the various types of fraud affecting merchants: identity fraud or fraudulent transactions claimed the majority of the cost of fraud, representing 52 percent of total fraud losses. Also, it was some merchant groups in particular that suffered the damage. Large eCommerce retailers lost 40%, an upsurge from last year.

Merchants specializing in telecommunications, online gaming and social networking sites reported 64 percent to 67 percent of their total yearly fraud loss as a result of identity fraud. Digital goods merchants attributed 54% of their fraud loss to unauthorized purchases. Furthermore, one in five retailers reported an increase in unauthorized transactions associated with identity fraud.

Credit card crimes continue to sharply rise, but it has been alternative payment systems such as online and mobile payments that have been a confusing source of losses for some major stores. Finally, there’s “friendly fraud,” where a customer places an online purchase with their credit card, then issues a chargeback after getting the purchase. This accounted for more than one third of overall fraud for online merchants.

Mallory Megan works for Rapid Recovery Solution, a medical collection agency. Looking for subrogation? Hire debt collectors.

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