Organisations incur an average cost of HK$3.64 ($2.70 for retailers and $4.31 for financial institutions) for every Hong Kong dollar lost to fraud, according to the 2023 True Cost of Fraud™ Study – Asia Pacific by LexisNexis Risk Solutions. More than half (58%) of companies in Hong Kong reported an increase in fraud in the 12 months before the survey.
Cost of fraud in APAC
APAC business revealed that the cost of fraud almost quadrupled the face value lost in fraudulent transactions. For the first time, physical fraud came second to digital channels, making up 51% of overall fraud losses. Cybercriminals attack financial institutions (46%) and retailers (44%) during new accounts creation. Cyber attackers use stolen or synthetic identities to open fraudulent accounts, taking advantage of digital banking and digital commerce.
"It is self-evident that new forms of fraud increase the risk of financial losses for consumers and businesses. The issues facing businesses become even more challenging due to the fraud multiplier effect, where the losses experienced by organisations continue to increase and far exceed the lost face value in any transaction. Preventing fraud requires a multi-layered approach throughout the customer journey," said Thanh Tai Vo, director of fraud and identity, APAC at LexisNexis Risk Solutions.
Key Findings
The report reported that 79% of Hong Kong respondents observed how fraud influenced customer satisfaction, especially in customer conversion (79%). The study revealed the evolving fraud tactics of cybercriminals, such as exploiting the vulnerabilities of new payment methods.
Moving forward, LexisNexis reminds organisations to embrace fraud management and authentication solutions, maximising technologies such as AI, machine learning, and biometric and behavior-based authentication methods.