Survey finds that retail fraud is taking a great financial toll
Atlanta — The “True Cost of Fraud” study by LexisNexis found that retailers incurred $2.70 in costs for every dollar in fraudulent transactions. The cost incorporates charge backs for merchandise, the fees and interest to financial institutions and payment processors as well as any replacement, redistribution or restocking fees incurred by a merchant.
The study, conducted by Javelin Strategy & Research, examined how fraud affects retail merchants, financial institutions and U.S. consumers, as well as identified and quantified the losses involved in a fraudulent retail transaction.
Findings from the study showed the cost of fraud is on the rise compared with last year. This year’s cost of $2.70 per $1.00 in merchandise is up $0.40 from last year’s level of $2.30. One of the areas of major fraud growth is the mobile sector. This year, mobile merchants paid $2.83 for every $1.00 lost compared to just $2.00 for 2011, an increase of more than 40%. The analysis in the study showed that criminals are shifting more attention to merchants that use a broader array of sales interaction methods, including browser, applications, text and evolving near-field communication methods.
The study also found:
- The LexisNexis Fraud Multiplier among international merchants has risen from 2.2 to 2.5 since last year, an increase of almost 14% per dollar of fraud;
- Only 39% of merchants believe that lower fraud rates can increase customer loyalty, meaning 61% don’t relate fraud reduction to improved customer loyalty; and
- 33% of consumers who fall victim to fraud avoid certain merchants. Thus, customer confidence is critical in maintaining and improving reputation and translates into return customers for merchants demonstrating they have earned that trust.
“With the size and pattern of fraud significantly impacted by global economic conditions and the move to mobile payments, this turbulent time requires merchants to be more vigilant than ever,” said Jim Rice, director, market planning, retail and e-commerce markets, LexisNexis Risk Solutions.
99 Cents Only amps up sustainable efforts in Southern California
CITY OF COMMERCE, Calif. — 99 Cents Only has leased 40 new compressed natural gas-powered tractors from Ryder.
The new CNG trucks will operate exclusively in the Southern California market, making store deliveries and picking up goods from vendors. As part of its full-service lease, Ryder will provide both the CNG tractors, as well as maintenance for the vehicles. The chain said the tractors will replace its oldest diesel burning units with cleaner CNG rigs, making it one of the largest private Class-8 CNG fleets in Southern California.
"We are pleased to announce that we not only plan to continue offering our valued customers the best selection of products at the lowest possible prices, but have also made a commitment to our community and global environment by converting a significant portion of our delivery trucks to compressed natural gas," 99 Cents Only CEO Eric Schiffer said. "We expect to reduce the carbon footprint of the fleet and its CO2 emissions by up to 25%. This will positively impact both our customers and the communities our stores serve."
LoyaltyOne: Consumers less willing to share personal information with companies
CINCINNATI — Consumers continue to be cautious about sharing their personal information, according to an online survey conducted by LoyaltyOne, a global provider of coalition loyalty, customer analytics and loyalty services.
Among 1,000 respondents surveyed, LoyaltyOne found that 78% of them do not feel they receive any benefit at all from sharing information, up from 74% in 2011; less than half feel that companies use their personal data to better serve the consumer, an 11% slip from 2011; and 62% said they would share more personal data if it meant receiving relevant product and service offers, down from 66% in 2011.
"These responses point to an unmistakable trend. Marketers’ efforts to create relevant customer experiences through data need to be re-addressed or they run the risk of their efforts not resonating with customers," LoyaltyOne president Bryan Pearson said. "Consumers are disappointed. For years they’ve provided their valuable information and they’re not realizing something of suitable worth in return. If businesses don’t act quickly to demonstrate they have the consumer’s best interest at heart, they risk an erosion of the business-to-consumer relationship."
The survery also found that only 50% said they’d be willing to give a trusted company their religious affiliation, followed by their political affiliation and sexual orientation (both 49%), health information (36%), mental health information (26%), browsing history (24%) and smartphone location and number of sexual partners (tied at 15% each). Last on the list was their social security number (11%).
For detailed results of the report, click here.