LexisNexis Risk Solutions examines smaller lending institution fraud impact


Findings generated from a LexisNexis Risk Solutions analysis determined lending fraud financially impacts smaller banks, credit unions, and digital lenders at twice the rate of larger competitors.

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The data and technology solutions firm’s 2019 Small and Mid-Sized Business (SMB) Lending Fraud Survey sought feedback from 134 individuals responsible for making risk and fraud assessments or decisions for SMB customers.

The analysis stemmed from the quest to better understand SMB lending frauds 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.

The work showed fraud monetary losses for smaller banks amounting to 4.5 percent and 5.8 percent of overall revenue, compared to 2.9 percent for larger institutions, with fake identities, synthetic identities, cyberattacks on account creation or identity spoofing for account takeover on existing accounts serving as some of the fraud vehicles used.

“Digital lenders, in particular, are ripe for target by fraudsters since they emphasize speed and application efficiency over fraud prevention,” Ben Cutler, vice president of business risk and specialty markets at LexisNexis Risk Solutions, said. “Over the past 24 months, digital lenders alone realized a rise in fraud attacks of 8.2 percent, almost as much as large financial institutions at 8.6 percent. Given historical and expected fraud rates, it’s no surprise that digital lenders plan to increase investment in anti-fraud initiatives in 2020.”

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