Small and midsize business lending fraud in the U.S. increased 6.9% in 2021 from a year earlier, according to a recent study from LexisNexis Risk Solutions. The study found that fraud costs as a percentage of annual revenue increased 32.6% for larger banks—which are defined as those having more than $10 billion in assets—increased 17.6% for fintech firms and increased 10.9% for smaller banks with less than $10 billion in assets.
A majority of small and midsize business lenders attribute the increased fraud to the COVID-19 pandemic, with 76% of larger banks and 67% of smaller banks saying it has driven the rise of fraud in the past 12 months. Sixty percent of large banks responded that they have experienced fraud involving the use of legitimate consumer and business identity information in 2021, up from 45% in 2019.
During the past year of the pandemic, consumer lending fraud was seen as being more complex than in previous years, according to the report, with Paycheck Protection Program and CARES Act loans likely playing a part, as more fraud involving stolen or fake consumer identities has occurred.