Small and midsize business (SMB) lending fraud has increased by 6.9% in the US since 2020, according to a new report from LexisNexis Risk Solutions.
Furthermore, SMB lending fraud losses account for a significantly higher percent of financial firms’ annual revenues year-over-year at a 6.2% increase overall. Larger banks with over $10bn in revenue and FinTech and digital lenders had the sharpest year-over-year increase, it said.
LexisNexis surveyed 149 people working at banks, credit unions, FinTech/digital lenders and payment processors responsible for risk and fraud assessments or decisions for SMB customers.
One of its findings was that more fraud prevention costs have involved labour compared to early 2020, as lending faced increased loan requests due to the Paycheck Protection Program.
It also found that online and mobile channels continue to represent the largest share of lending origination transactions. Mobile channel fraud losses increased by more than 10%, it said.
LexisNexis Risk Solutions director of business risk strategy Tom Hunt said, “The digital channel environment is upon us and continues to grow as customers and prospects expect digital lending options, particularly during times that make in-person transactions more challenging.
“At the same time, fraud is evolving and has become more complex for lenders. Various risks can occur simultaneously with no single solution to solve for all of them. To be effective, fraud tools now need to authenticate both digital and physical criteria simultaneous with identity and transaction risk.”
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