Uncovering the true cost of fraud

Implementation of a holistic approach to identity verification requires investment and organizational commitment. As fraudsters become more sophisticated, looking at a single attribute, such as an email, isn’t as effective as looking at the identity by tying that email to the person who also lives at their given physical address.
These linkages between digital and traditional identity attributes are essential to identity verification, and by wide margins, companies believe that linking the elements reduces fraud and provides greater confidence about a customer’s identity. Therefore, companies need to consider the barriers to adoption for a holistic approach to identity verification by weighing the cost of waiting and the impacts of fraud that reach beyond financial losses.
Barriers to adoption vs. the cost of waiting
There are obvious impacts of fraud such as write-offs and chargebacks; however, the true impact can reach much further when considering other cost factors. When surveyed, respondents surprisingly prioritized reputational damage over revenue loss when stating the true cost of fraud. The long-term reputational damage has an even bigger negative impact than the short-term revenue hit.
The barriers to adoption include several reasons, such as overall cost, implementation time, a lack or tools and skills of staff, and the overall difficulty of calculating the ROI. However, organizations who have mastered this have proven that the benefits far outweigh these barriers.
With the hard dollar cost of fraud averaging $548,500, companies that use a holistic approach to identity verification are able to reduce manual review, lower fraud rates, and reduce chargebacks. As these benefits are factored in, the cost of waiting is quickly outweighed by the benefits of implementation.
Read more in the full report: The State of Identity Maturity Verification.

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