For every rupee lost to fraud by individuals, organisations incur an average cost of Rs 4 (Rs 3.07 for retailers and Rs 4.64 for financial institutions), a survey said on Monday.

Also, 54 per cent of companies have reported an increase in frauds in 2023.

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The annual report, LexisNexis True Cost of Fraud Study – Asia Pacific, compiled by Forrester Consulting, indicates that businesses in the Asia Pacific region (APAC) now face a cost of fraud that is nearly four times the actual amount lost in fraudulent transactions.

For instance, a fraudulent transaction worth Rs 1,000 costs businesses an average of Rs 4,000 to address the losses incurred, which cover external expenses, interest, fees, and the costs of replacing or redistributing lost or stolen items.

These costs include not only the direct financial losses from fraud but also internal labour expenses, external costs, legal fees, recovery charges, and the costs related to replacing or redistributing lost or stolen merchandise, it said.

A LexisNexis survey reveals that 77 per cent of respondents reported that fraud negatively impacts customer satisfaction while 78 per cent observed a detrimental effect on customer conversion rates, both figures exceeding the APAC average.

It said that the fraud has increased for 54 per cent of Indian organisations year-on-year. In APAC, digital channels account for more fraud losses than physical channels. Four in five Indian organisations say fraud is affecting their customer conversion rates.

The report highlighted that as businesses and consumers increasingly engage online, cybercriminals find ample opportunities to exploit these digital, cross-border transactions.

The anonymity provided by digital platforms facilitates fast and often untraceable fraudulent activities. Moreover, the advent of technologies such as artificial intelligence enhances the capabilities of cybercriminals, broadening their scope to exploit both consumers and businesses effectively.

Across the region, digital channels account for 51 per cent of overall fraud losses.

The report also said that the criminals were continually innovating, which means that fraud and its associated costs represent evolving threats that cannot be easily mitigated.