Most Financial Services Firms Report Rise in Fraud Targeting Mobile and Digital Transactions

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With mobile device usage firmly entrenched in consumer behavior, it’s no wonder that fraudsters follow these consumers. This is most evident in the latest report from LexisNexis Risk Solutions, which found that 98% of financial services firms surveyed said fraud targeting mobile has increased.

These increases also meant the cost of fraud increased. In 2021, mobile accounted for 27% of respondents’ fraud costs, an increase of 5 points from 22% in 2020. LexisNexis Risk Solutions defines financial services as retail and commercial banks, credit unions and investment, trust and wealth management providers. .

“Mobile has been one of the fastest growing channels for most organizations to interact with their customers,” said Christopher Schnieper, director of fraud and identity for the company based in Atlanta, in an e-mail to News on digital transactions. “A combination of new mobile users and additional transaction channels has created an environment in which fraudsters can exploit new users or less developed capabilities.”

And it’s perhaps no surprise that bot attacks also increased in 2021. In 2020, US financial services firms reported that 14% of their transactions were generated by malicious automated bot attacks. In 2021, they jumped to 24%, according to the “True Cost of Fraud – Financial Services and Lending” report.

A number of factors are at play, Schnieper says. “Robot attacks have become increasingly sophisticated over the years. In the past, many of these bot or script attacks had to be developed by each fraudster. Now fraudsters can download features that automatically facilitate bot attacks. The ability to automate attacks on a much wider and more widely used set of devices (phone, tablet, laptop) has also increased, providing fraudsters with more potential targets.

Overall, the report found that the cost of fraud for U.S. financial services and credit companies is between 6.7% and 9.9% higher than before the pandemic. For every dollar lost from fraud, US financial services firms incurred $4 in related costs in 2021, down slightly from $4.12 during Covid in 2020, but up 9.9% from $3.64 pre-Covid 2020. For loan companies the cost is $4.16 in 2021, down from $4.43 in 2020 during Covid and up from $3.90 pre-Covid 2020.

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