LexisNexis released its first True Cost of Real Estate Fraud study that examines fraud trends in the United States based on responses from 360 risk and fraud managers who found that mortgage lenders are particularly vulnerable through online and mobile channels.
The report will also track “pain points” related to fraud detection, prevention and customer experience. It also tracks the time and resources mortgage originators and managers have applied to prevent attacks.
Overall, the report found that for every dollar of fraud, it costs $5.34 to recover that money, while for noncustodial originators, such as mortgage companies, they spend an average of $4.66. dollars to recover every dollar of fraud.
According to LexisNexis, a large majority of businesses report that overall fraud has increased over the past 1-3 years, with consumer fraud accounting for approximately two-thirds of lender and manager fraud losses over the past 12 years. last months. Most agreed that fraud activity has only increased during the pandemic, with all channels seeing an increase in fraud, not just mobile and online portals.
Key takeaways from the report include:
- Digital transactional impacts on fraud: The costs of fraud come largely from consumers looking to buy a new home through online and mobile transactions. Direct-to-consumer (retail) and matched lending are the top transaction types, with direct-to-customer accounting for a larger share of fraud costs and average monthly attacks. However, custodial originators and securities/settlement companies also bear a significant share of losses from construction-related loan fraud.
- Top Fraud Challenges: Identity verification is a major challenge for mortgage originators, managers and title/settlement companies. The challenge is to assess digital identity attributes such as email/phone number and identify synthetic identities. This contributes to other issues related to customer friction, inability to detect malicious bots, and difficulties in distinguishing between legitimate consumers and bogus consumers. The pandemic and the growth of the mobile channel have compounded these issues and increased the risk of fraud with interactions between call centers and phones.
- Best practices: The results show that companies using a multi-layered solutions approach integrated into cybersecurity and digital customer experience operations can reduce fraud and related costs while improving the efficiency of identity verification and fraud detection. Integrating fraud prevention with cybersecurity operations throughout the digital customer experience and layering supporting capabilities such as artificial intelligence and machine learning further strengthens fraud prevention.
“Although the future is uncertain, it is safe to assume that the accelerated movement towards online/mobile transactions will continue to grow and that mortgage originators, managers and securities/settlement companies should develop and improve the ‘digital customer experience while protecting against fraud’, mentioned dawn hill, Director of Real Estate Fraud and Identity Strategy at LexisNexis Risk Solutions. “A successful approach to fraud detection and prevention involves integrating technology, cybersecurity and digital experience operations in a way that addresses the unique risks of different transaction channels and payment methods, as well as by individuals and types of transactions.”
Click here to download a copy of the 57-page report via the LexisNexis website.