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LexisNexis Studies US Merchant Fraud Losses

According to a new report released today by LexisNexis® Risk Solutions, U.S. merchants are incurring $191 billion in fraud losses each year. The 2009 LexisNexis® True Cost of Fraud Benchmark Study discovered that merchants must absorb nearly 10 times the identity fraud cost incurred by financial institutions. Retail merchants experience a massive $100 billion in losses solely attributed to identity fraud, which escalates to $191 billion when factoring in the additional cost of lost and stolen merchandise. The study also found that merchant fraud losses amounted to more than 20 times the total value of consumer fraud victim losses which totaled approximately $4.8 billion in 2008.

Developed in conjunction with Javelin Strategy & Research, the study examines how U.S. retail fraud affects merchants, financial institutions and consumers. The full study is available on the LexisNexis® Risk Solutions Web site at: risk.lexisnexis.com.

"The impact of retail fraud is multifaceted and far-reaching, as this crime claims multiple victims," said Dennis Becker, LexisNexis Risk Solutions vice president, corporate markets. “We are seeing significant increases in identity fraud overall as well as increases in typical fraud categories such as chargebacks," said Becker. "With the economic downturn and increasing sophistication in criminal fraud methods, it is crucial that merchants and financial institutions work together to mitigate fraud."

According to the study, retail merchants are absorbing the vast majority of the costs associated with fraud. Among the numerous fraud types affecting merchants, identity fraud or fraudulent transactions made up the bulk of fraud from a cost standpoint, representing 52 percent of total fraud losses. In addition, certain merchant segments revealed a higher prevalence of fraudulent transactions such as large eCommerce retailers, of which 40 percent saw an upsurge. Digital goods merchants attributed 54 percent of their fraud loss to unauthorized purchases, while merchants in telecom, social networking industries and online gaming reported 64 percent to 67 percent of their total annual fraud loss as the result of identity fraud.

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