Study: Mobile purchases driving e-commerce fraud
Fraud and its costs are continuing to rise in the United States and Canada as consumers shift toward mobile payments.
U.S. merchants incur an average cost of $4.61 for every $1 of fraud, compared to $4.52 in Canada, according to a survey of risk and fraud executives in the two nations by LexisNexis Risk Solutions. Mobile transactions such as digital wallets, peer-to-peer payments and QR codes drive significant e-commerce fraud costs, accounting for 33% of expenses in the U.S. and 41% in Canada.
The U.S. e-commerce segment reports the highest fraud costs from digital transactions, according to the report, with 53% tied to online purchases and 30% to mobile channels. Canadian e-commerce faces similar challenges, with 37% of costs linked to mobile transactions. LexisNexis says this highlights the need for merchants to protect increasingly digital payment methods.
[READ MORE: Survey: Majority of businesses increasing fraud budget, prevention teams]
“Rising fraud costs strain businesses financially and damage customer trust,” said Maanas Godugunur, senior director of fraud and identity at LexisNexis. “Staying ahead of fraudsters requires AI-powered fraud detection and a multi-layered approach that identifies fraud in real time while safeguarding the customer experience.”
Fraud increases customer churn for 63% of respondents and forces businesses to allocate more resources to fraud management. Nearly two-thirds (64%) of respondents said fraud hurts customer conversion rates, pointing to the challenge of balancing strong security with a quality customer experience.
A significant number of businesses are yet to adopt advanced fraud prevention tools, such as AI models, behavioral biometrics and third-party detection systems. Forty-one percent (41%) of North American merchants still depend on manual processes to prevent fraud, highlighting a widespread reliance on outdated methods.
Additional insights from the report include the following:
- In the U.S., poor user experience (36% retail, 37% e-commerce) is the primary driver of abandonment at new account creation.
- Most businesses mix manual and automated processes, with Canadian and U.S. e-commerce relying more on automation than retail. Only three percent (3%) of Canadian e-commerce businesses and six percent (6%) in the U.S. fully automate fraud prevention.
- Merchants struggle with onboarding processes, while ineffective authentication and fraud detection make it harder to counter evolving threats. Up to 41% of U.S. businesses identify identity verification as a major challenge at new account creation, higher than for purchase transactions (36%) and account logins (37%).
The True Cost of Fraud Study by LexisNexis Risk Solutions, conducted by KS&R, surveyed 569 fraud and risk executives across U.S. (487) and Canadian (82) retail and e-commerce companies in late 2024 and early 2025.
