South African companies incur an average cost of R3.64 for every rand lost to fraud.
According to the 2023 LexisNexis® True Cost of Fraud™ Study – Europe, Middle East and Africa, retailers incur a cost of R3.10 and financial institutions R4.52.
“These costs encompass financial losses due to fraud, as well as internal labor expenses, external costs, interest and fees, along with the expenses associated with replacing or redistributing lost or stolen merchandise,” the researchers said.
The study revealed that 49% of companies in South Africa reported an increase in fraud in 12 months prior to the survey.
Criminals constantly innovate. new payment methods provide fraudsters with opportunities to exploit vulnerabilities in the retail sector. Financial institutions are realizing increasing trends in identity theft, scams and digital wallet fraud.
2023 LexisNexis® True Cost of Fraud™ Study – Europe, Middle East and Africa
“While rapid adoption of digital payments improves payment experiences, it also exposes numerous systems and channels to more innovative fraud attacks. Across Europe, Middle East and Africa (EMEA), digital channels account for 52% of overall fraud losses, surpassing physical fraud for the first time.”
“Consequently, cybercriminals exploit the anonymity of digital, cross-border transactions to execute fast and untraceable fraud. Additionally, the rise of scams and the use of technology, such as artificial intelligence (AI), expands cybercriminals’ ability to exploit both consumers and businesses.”
The study also reflected the evolution of criminal tactics.
“More than half (52%) of businesses in EMEA identify the rise of synthetic identities as the primary challenge in customer identity verification. Fraud remains a widespread problem for businesses, exerting pressure not only on financial resources but also impacting overall operational efficiency, customer trust and reputation.”
EMEA at LexisNexis Risk Solutions fraud and identity director Jason Lane-Sellers said: “It is self-evident that new forms of fraud increase the risk of financial losses for consumers and businesses. The issues facing businesses become even more challenging due to the fraud multiplier effect, where the losses experienced by organizations continue to increase and far exceed the lost face value in any transaction. Preventing fraud requires a multi-layered approach throughout the customer journey.”
