Fraud continues to grow for financial services and lending firms, both before and during the pandemic
LexisNexis Risk Solutions released its LexisNexis Risk Solutions 2020 True Cost of Fraud Study: Financial Services & Lendingfor the United States and Canadian financial services and lending sectors. The research provides a snapshot of pre and post-COVID-19 lockdown fraud trends and spotlights key pain points for these industries. The study reveals that financial services and lending fraud continues to increase and impact firms, particularly those earning more than $10 million in annual revenues.
The cost of fraud pre-COVID-19 among U.S. financial services and lending firms rose 12.8% over the previous reporting period, which covered the first halves of 2018 and 2019 respectively. For every dollar of fraud lost in the pre-COVID period, U.S. financial services and lending companies incurred an average of $3.78 in costs, up from $3.35 since the last edition of the survey. These losses include the transaction face value for which firms are held liable, plus fees and interest incurred, fines and legal fees, labor and investigation costs and external recovery expenses.
Lenders continue to have somewhat higher costs than financial services firms. Lenders alone see an average of $3.90 in costs for every dollar lost to fraud, up from $3.44, a 13.4% increase. Financial services firms incur an average of $3.64 cost per dollar of fraud loss, up from $3.25. This is the first year that Canadian firms participated in the survey: Canadian financial services and lending companies realize an average of $3.46 in costs for every dollar lost to fraud.