The Cost of Scams And Fraud Tops $5 for Each Dollar of Loss

Financial-services organizations have long held a sobering view of the cost of scams and fraud. Now, the cost of these crimes and misdeeds has reached an average of $5.75 per every $1 of fraud loss, finds the latest edition of the 2025 True Cost of Fraud Study for North America from LexisNexis Risk Solutions. The study focuses on financial services and lending.

That finding reflects not just direct losses, but escalating downstream impacts in operations, compliance, and consumer trust, says the report, issued Wednesday.

The cost, which is labeled the LexisNexis Fraud Multiplier, had been $4 in 2021 for U.S. financial services companies and $3.65 for Canadian ones. The Canada figure for 2025 is close behind the U.S. figure, at $4.99.

That increase is notable for Maanas Godugunur, senior director, fraud and identity, LexisNexis Risk Solutions.

“The LexisNexis Fraud Multiplier has crossed $5, marking an increase of more than 40% over the past four years in the U.S.,” Godugunur tells Digital Transactions News by email.  “It continues to surprise me how many institutions rely on manual processes to address fraud challenges, even while expanding their digital capabilities.”

Financial-services organizations look to a mix of manual and automated techniques to counter fraud, drawing on an average of three, such as name, address, and date of birth verification, geolocation tools, and behavioral biometrics, the report says.

Many, 32%, still rely on mostly manual processes to address fraud issues, Godugunur says. “These processes limit the ability to detect bot activity and sophisticated fraud attacks while reducing adaptability to evolving fraud. AI has emboldened more sophisticated fraud tactics.”

There are some positive moves. Fifty-one percent of U.S. financial-services institutions use artificial intelligence and machine learning to counter scams.

“Among companies using automated processes, 82% expect improvements in fraud detection and mitigation. A layered approach combining multiple risk signals and consortium data powered by AI/ML technologies effectively addresses both current and future challenges,” he says.

Even as many turn to automated processes, human oversight will remain essential. Godugunur says companies will focus on analysing transactions that pose greater risk. “FIs should invest in fraud-risk mitigation strategies that adjust to evolving fraud patterns with minimal manual intervention,” Godugunur says.