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The Growing Impact of Fraud on Retail and Ecommerce

Fraud is no longer just a minor nuisance for retail and e-commerce companies in North America; it has become a significant financial burden. According to LexisNexis® Risk Solutions, the 2026 True Cost of Fraud™ Study reveals that the total cost of fraud has soared to an average of $5.13 for every $1 lost in the United States and $5.23 in Canada. This represents a monumental shift, marking the first time the fraud multiplier has breached the $5 threshold in both markets.

Financial Burden of Fraud

The financial ramifications of fraud are far-reaching. The study indicates that 37% of retail and ecommerce companies experienced considerable revenue losses attributed to fraud over the past year. As organizations implement anti-fraud measures, they inadvertently increase customer friction. Over 56% of U.S. retailers and 54% of U.S. ecommerce businesses report that these measures have led to higher customer churn rates. The dual challenge of tackling fraud while maintaining a smooth customer experience continues to strain these businesses.

Maanas Godugunur, Senior Director of Fraud and Identity at LexisNexis, emphasized the evolving nature of fraud: "Organizations that take an integrated, multi-layered approach to fraud prevention are better positioned to protect customers and enhance their experiences, leading to stronger customer loyalty and overall growth."

Complex Landscape of Fraud Risks

The landscape of fraud is becoming increasingly intricate. Fraud risk is now pervasive across both digital and physical channels, with online and mobile platforms accounting for up to 83% of fraud costs for ecommerce merchants. Common threats include chargeback fraud, lost or stolen goods, and fraudulent returns, indicative of the diverse challenges today’s merchants face.

The fraud multiplier has more than doubled in the past decade, escalating from approximately $2.40 per $1 of loss in 2016 to over $5 today. This increase is attributed to the operational, compliance, and reputational costs that come with managing fraud effectively.

Emerging risks are also arising from the rapidly growing sector of agentic commerce, where AI-driven agents conduct transactions on behalf of consumers. More than two-thirds of U.S. merchants express concern regarding the fraud risks associated with these advanced transactions, highlighting the urgent need for adaptive and robust controls.

Effective Fraud Prevention Strategies

Despite the mounting challenges, businesses that adopt mature fraud prevention strategies tend to experience better outcomes. The study found that 20% of high-maturity organizations reported decreased customer churn due to effective fraud prevention tactics, in contrast to just 9% of lower-maturity organizations. Furthermore, high-maturity companies are significantly more adept at preventing fraud at scale, stopping 1,000 or more fraudulent transactions per month compared to a mere 4% of low-maturity entities.

To combat fraud, retail and ecommerce organizations are increasingly gravitating towards integrated, multi-layered prevention strategies. These strategies blend identity verification, device intelligence, and behavioral analytics throughout the customer journey. By improving detection while reducing friction, these measures aim to align fraud management practices seamlessly with customer experience goals.

Conclusion

The challenges posed by fraud and the resulting complexities are not just financial burdens; they signify a growing insistence on innovation and adaptability within the retail and ecommerce sectors. As businesses navigate this treacherous landscape, those that invest in sophisticated, layered fraud prevention strategies will emerge more resilient and capable of fostering long-term customer loyalty.

Research Methodology

The insights presented in the 2026 LexisNexis True Cost of Fraud Study for Retail and Ecommerce are derived from data collected from 513 risk and fraud leaders at consumer-focused organizations in the United States and Canada.

About LexisNexis Risk Solutions

LexisNexis Risk Solutions provides information-based analytics and decision tools, amalgamating public and industry-specific content with advanced technologies to support assessment and prediction of risk while enhancing operational efficiency. The company is headquartered near Atlanta, Georgia, and serves clients in over 190 countries.