A recent survey found that 42% of companies in the UAE experienced more fraud. According to the LexisNexis True Cost of Fraud™ Study – Europe, Middle East, and Africa, UAE organizations faced an average cost of Dh4.19 for every Dh1 lost to fraud. This includes financial losses, labor expenses, and other costs like replacing stolen goods. The study, conducted by Forrester Consulting, shows that businesses in Europe, the Middle East, and Africa now bear a cost of fraud almost four times the value lost in fraudulent transactions.
The rapid rise in digital payments brings convenience but also exposes systems to more advanced fraud. In Europe, the Middle East, and Africa (EMEA), digital channels now account for 52% of fraud losses, surpassing physical fraud for the first time. Cybercriminals take advantage of digital anonymity to carry out fast and untraceable fraud, aided by technologies like artificial intelligence (AI). Synthetic identities, where fake identities are created, pose a significant challenge for businesses, with over half of them identifying it as the main issue in customer identity verification. Fraud not only drains financial resources but also affects operational efficiency, customer trust, and reputation. Jason Lane-Sellers, from LexisNexis Risk Solutions, emphasizes the need for a multi-layered approach to prevent fraud throughout the customer journey.
Key Findings:
Commercial Impact: Fraud has a significant impact on customer satisfaction and conversion rates for businesses in the UAE. Compared to the rest of EMEA, a higher percentage of UAE respondents, 92%, state that fraud affects customer satisfaction, while 96% observe its impact on customer conversion. This indicates the importance of maintaining a positive customer experience amid fraud prevention efforts.
Evolving Fraud Management Practices: Criminals are constantly innovating, posing dynamic challenges for businesses. New payment methods create opportunities for fraudsters to exploit vulnerabilities, particularly in the retail sector. Financial institutions are witnessing increasing trends in identity theft, scams, and digital wallet fraud.
Moving Forward: To combat the growing threat of fraud and cybersecurity risks, organizations need to adopt proactive fraud management and authentication solutions. This includes harnessing the capabilities of technologies like AI, machine learning, and biometric and behavior-based authentication methods to stay ahead of evolving fraud tactics.
The report gathered insights from 1,845 fraud management decision-makers worldwide, including 55 respondents from the UAE, representing financial institutions and retail companies. The survey covered 12 months and aimed to assess the state of fraud and the specific challenges related to digital payments in emerging markets.
News Source: Khaleej Times
