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Fraud Losses Attributed to the Login Event are Catching Up to Fraud Losses from Transactions

Although fraud attacks occur more frequently at the account creation and transaction events, the dollar losses attributed to fraud at the login event is nearly as high for eCommerce merchants and higher for financial institutions, according to the LexisNexis 2022 True Cost of Fraud Study.

The shift of fraud focusing on the transaction event to the account login event is evident over the most recent three years of this annual study from LexisNexis as the distribution of identity fraud attacks at the transaction event has fallen from 60 percent in 2020 to 37 percent in 2022. Over the same time period, the distribution of fraud at the account login event has increased from 16 percent to 31 percent for US eCommerce merchants.

While account takeover (ATO) occurs less frequently than fraud at the transaction event, it is more costly. Among US eCommerce merchants who participated in True Cost of Fraud Study, 46 percent indicated they are most susceptible to fraud attacks occurring at the transaction event, compared to just 16 percent who believe the account login event to be the most susceptible. When asked about the distribution of fraud losses across each event, however, US eCommerce merchants indicated that 31 percent of fraud losses occur at account login, not too far behind the transaction event which represents 38 percent of fraud losses.

Another variation of this annual report from LexisNexis focused on financial institutions, which have also struggled with ATO. US banks indicated that 37 percent of their fraud losses are attributed to the account login stage, while 34 percent of fraud losses can be attributed to the distribution of funds event and 29 percent attributed to the account creation stage. Credit lenders and mortgage lenders also cite the account login event as the stage where the most fraud losses can be attributed. Only investment firms attribute more fraud to the distribution of funds event, which represents 36 percent of fraud losses compared to 34 percent of fraud losses from the account login stage.

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