The Rising Cost of Fraud in India
Fraudulent activities are on the rise in India, with a recent report by LexisNexis Risk Solutions revealing that for every Rupee lost to fraud, firms incur an additional cost of Rs 4. This means that the true cost of fraud is significantly higher than the initial financial loss.
The LexisNexis True Cost of Fraud Study – Asia Pacific, based on a survey conducted by Forrester Consulting, found that 54% of Indian organizations experienced an increase in fraud cases over the past year. These fraudulent activities not only result in financial losses but also lead to expenses related to labor, legal fees, recovery, and replacement of stolen merchandise.
The study also highlights a shift in the mode of fraudulent activities, with digital channels now accounting for 51% of overall fraud losses across the Asia Pacific region. This surpasses physical fraud for the first time, indicating that cyber attackers are increasingly exploiting the anonymity of digital transactions to conduct untraceable acts of fraud.
"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," said Cameron Church, director, fraud and identity, APAC at LexisNexis Risk Solutions. "Preventing fraud requires a multi-layered approach throughout the customer journey."
Another concerning trend is the use of stolen identities to open fraudulent accounts, leading to financial and data breaches. This highlights the need for robust authentication solutions such as AI, machine learning, and biometric and behavioral authentication techniques.
The impact of fraud extends beyond financial losses, affecting consumer perception and engagement. The study found that 77% of Indian consumers claim that experiences of fraud have affected their satisfaction levels, and 78% notice its impact on customer conversion.
In light of these findings, it is crucial for businesses to adopt forward-thinking fraud management and authentication solutions to safeguard against potential threats. As the saying goes, prevention is better than cure. This critical survey serves as a reminder of the escalating threat from fraudulent activities and the need to enhance security measures and reinforce customer confidence in digital transactions.