MEXICO CITY, March 18, 2020 /PRNewswire/ -- LexisNexis Risk Solutions, released today its 2019 True Cost of Fraud report in Mexico. The study surveyed 90 Mexican executives in retail commerce, e-commerce and financial services and shows that the cost of fraud in Mexico is trending upward, amounting to 1.96% of annual revenues of Mexican companies overall (retail, e-commerce and financial services) compared to 1.75% in 2018.
The LexisNexis Fraud Multiplier℠, which measures the cost organizations actually lose for each dollar of fraud lost, found Mexican merchants in 2019 paid 3.55 times the amount of each fraudulent action, up from 3.39 times in 2018. The cost of fraud includes losses related to 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.
The study reveals that for each fraudulent transaction, the cost for Mexican m-commerce merchants (e-commerce on mobile phones) increased to 3.87 times the amount of the lost transaction value, up from 3.75 times in 2018. Increased fraud growth in the mobile channel is likely to continue rising as the number of financial transactions on mobile devices continues to grow. The study also shows that many Mexican companies today are not fully equipped to address mobile fraud since they do not track, nor do not have the proper tools to track, fraudulent transactions. This is key given that Mexico ranks second in LATAM, after Brazil, as the top cyber attacker in the region.
The study shows that in 2019, Mexican businesses used a combination of means to financially transact with consumers: 92% accept credit cards, 87% accept cash and 91% accept debit cards. A growing number of businesses, however, financially transact using mobile apps and mobile wallets, emerging channels successfully used to reach unbanked consumers. In 2019, 50% used mobile wallets and 66% used third-party payment providers to transact.
Verifying identities is the principal challenge Mexico organizations face when people use online channels or mobile phones to transact. Identity fraud accounts for more than one-third of fraud losses in Mexico: Third-party identity theft accounts for 25% and synthetic identity fraud accounts for 12%.
Online channels are the most common area where fraud occurs, followed by mobile devices and in-person theft. In 2019, 37% of fraud occurred online, 29% in person, 25% through mobile devices, 14% by phone and 12% by e-mail. Within the mobile channel, 43% of fraud occurred through mobile web browsers.
Rafael Costa Abreu, director of fraud and identity for LexisNexis Risk Solutions, commented, "Although fraud in Mexico continues to evolve – as seen within this shift towards mobile fraud - organizations can effectively combat fraud with a layered solution approach to not only slow fraud growth, but help stop fraud before it occurs. Advanced global solutions prevent fraud as it evolves, even when it crosses geographic borders and organizations. With tools like consortium-based data sharing and bot data management combined with automated alerts, organizations can employ necessary innovations to help them stay ahead of fraudsters."
Find more information about the LexisNexis Risk Solutions 2019 True Cost of Fraud for Mexico study here.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers across industries. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
SOURCE LexisNexis Risk Solutions