Study: Banks See Fewer Fraud Attempts in 2019

Banks saw fewer monthly fraud attempts in the first half of 2019 compared to the first half of 2018, according to a new pre-COVID study from LexisNexis Risk Solutions. Overall, banks prevented on average 610 fraud attempts each month while seeing 488 fraud attempts succeed—down from 1,095 fraud attempts prevented monthly, and 595 successful fraud attempts, in 2018, the report found. By comparison, both prevented and successful fraud attempts rose at firms in the investment and wealth management industry, while nonbank lenders saw higher incidence of successful fraud attempts and fewer instances of prevented fraud.

However, fraud costs continued to rise. For every dollar of fraud lost, U.S. banks saw $3.63 in costs, up 8.9% from 2018. Costs include the transaction face value for which firms are held liable, fees and interest incurred, fines and legal fees, labor and investigation costs and external recovery expenses.

Mobile channels accounted for 20% of U.S. banks’ fraud costs in 2019, up from 16% in 2018, largely offset by online banking’s share declining from 31% to 26% of fraud costs. In-person channels continued to represent 29% of fraud costs for U.S. banks. Identity-based fraud was the top contributor to fraud losses, with 20% of losses this year for mid to large-sized financial services firms stemming from synthetic identity-based fraud.