Estimates of the cost of fraud vary widely, but almost everyone agrees that the cost is huge and appears to be increasing. Looking just at eCommerce, Forrester predicts that US and Western European eCommerce fraud will reach $18.6 billion in 2018. And in its 2017 True Cost of Fraud report, LexisNexis Risk Solutions estimates that fraud as a percentage of revenue rose to 1.58% in 2017, up from 1.47% in 2016 — and the volume of fraud increased to a monthly average of 238 fraudulent transactions in 2017, up from 206 in 2016.
Fraud management solutions help companies prevent and mitigate fraud losses. PetSmart recently shared the results of its collaboration with Kount. In 2017, after implementing Kount’s fraud management solution, PetSmart was able to cancel almost $4 million of fraudulent orders. By canceling these fraudulent orders, PetSmart also saved on potential labor loss, shipping costs, merchandise costs, chargebacks, fees, and fines. This translated into $3.00 to $3.50 for every dollar of fraudulent charges, giving an annual total savings of $12 million.
While companies use fraud management solutions primarily to prevent fraud, recent trends in the market point to them deploying fraud management tools to create an attractive customer experience and boost customer sales, acquisition, and retention.
Our first Forrester Analytics Fraud Management Solutions Forecast
Forrester Analytics recently examined how much companies are spending and plan to spend on fraud management solutions in its “Forrester Analytics: Fraud Management Solutions Forecast, 2017 To 2023 (Global)” report, developed in collaboration with Andras Cser. We estimate that global spending on fraud management solutions will grow to $10.4 billion in 2023, up from $5.0 billion in 2017 — a compound annual growth rate of 12.9%.