ATLANTA, Oct. 2, 2019 /PRNewswire/
-- LexisNexis® Risk Solutions today released the
results from its LexisNexis® Risk Solutions 2019 Small and
Mid-Sized Business (SMB) Lending Fraud Survey. The study found that
lending fraud financially impacts smaller banks, credit unions and
digital lenders at twice the rate of larger competitors, with fraud
monetary losses for smaller banks amounting to 4.5% and 5.8% of
overall revenue, compared to 2.9% for larger institutions.
"Small banks and credit unions, undoubtedly an important part of
our economy, experience higher rates of lending fraud, and our
surveys suggest this is due to lower investment in technology and
greater reliance on human assessments," said Ben Cutler, vice president, business risk and
specialty markets, LexisNexis Risk Solutions. "While the report
uncovered a growing level of fraud across all financial services
firms of all sizes over a two year period, small and mid-sized
financial institutions experienced fraud at higher levels.
"Digital lenders in particular are ripe for target by fraudsters
since they emphasize speed and application efficiency over fraud
prevention," added Cutler. "Over the past 24 months digital lenders
alone realized a rise in fraud attacks of 8.2%, almost as much as
large financial institutions at 8.6%. Given historical and expected
fraud rates, it's no surprise that digital lenders plan to increase
investment in antifraud initiatives in 2020."
Types of Attacks
With financial institutions
successfully adopting effective methods to fight consumer lending
fraud, fraudsters are moving on to small business lending fraud,
whether it be through fake identities, synthetic identities,
cyberattacks on account creation or identity spoofing for account
takeover on existing accounts. Due to the online nature of the
business, fraudsters target digital lenders more often than other
financial institutions.
Cyberattacks on new small business account creations have grown
35% in the last six months and identity spoofing has grown 20%.
Cybercriminals are creating fraudulent bank accounts or taking over
existing accounts, which can be used to take out multiple loans.
These risks are greater through the mobile channel, which
experienced a 107% growth in account takeover attacks in the last
six months.
Effective Attack Defense
Notably, according to the
study, organizations that reported being stronger at identifying
SMB lending fraud actually are more effective at detecting fraud.
Not only have these organizations largely prevented fraud increases
over the past two years, but they also experienced a lower level of
fraud – 3.0% of annual revenues, compared to 5.0% for those
organizations that reported only being somewhat effective detecting
fraud. More successful firms tend to be more effective at stopping
fraud at account origination or within the first month of the
customer relationship using tools like business and consumer fraud
analytics and SMB consortium information, to provide a more
holistic view of the SMB entity and the individuals behind it.
Methodology
The study surveyed
134 individuals with responsibility for making risk and
fraud assessments or decisions for SMB customers and set out to
better understand SMB lending fraud, specifically its volume, how
it is being identified and tracked, the types of fraud experienced,
what's being done to combat it and if there are differences in SMB
lending fraud based on the size or type of organization.
Download the LexisNexis Risk Solutions Small and Mid-Sized
Business (SMB) Lending Fraud Survey here. View the on-demand
webinar here.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced
analytics to provide insights that help businesses and governmental
entities reduce risk and improve decisions to benefit people around
the globe. We provide data and technology solutions for a wide
range of industries including insurance, financial services,
healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout
the world and are part of RELX (LSE: REL/NYSE: RELX), a global
provider of information-based and analytics and decision tools for
professional and business customers across industries. For more
information, please visit www.risk.lexisnexis.com and
www.relx.com.
Media Contact:
Marcy
Theobald
678.694.6681
Marcy.Theobald@lexisnexisrisk.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/smaller-banks-credit-unions-and-digital-lenders-hit-hardest-by-business-lending-fraud-losses-according-to-lexisnexis-risk-solutions-study-300926212.html
SOURCE LexisNexis Risk Solutions