As fraud shifts to mobile channels and AI-powered schemes, many merchants remain stuck with manual defenses—costing over $4 for every $1 lost
LexisNexis and Visa reports reveal rising financial impact, mobile vulnerabilities, and lagging fraud prevention tech across US and Canadian merchants.
Fraud costs in ecommerce surge to over $4 per $1 lost
North American ecommerce and retail businesses are facing rising fraud-related costs, operational complexity, and customer churn, according to the 2025 LexisNexis® True Cost of Fraud™ Study. The study shows that U.S. merchants now lose $4.61 for every $1 of fraud, while Canadian merchants lose $4.52—highlighting the indirect and compounding financial toll fraud continues to have on business.
The findings come from a survey of 569 fraud and risk executives across the U.S. and Canada, with data collected in late 2024 and early 2025.
📄 Read the full LexisNexis study here
Mobile payments and digital channels fuel fraud growth
One of the primary drivers of fraud is the rapid growth of mobile and digital payments, which are increasingly targeted by fraudsters using sophisticated, fast-evolving tactics.
Key mobile transaction stats:
- In U.S. ecommerce, 53% of fraud costs come from online purchases, with another 30% tied to mobile channels
- In Canada, 41% of ecommerce fraud costs stem from mobile payment methods
- Fraud tied to QR codes, digital wallets, and peer-to-peer payments has spiked:
- U.S. ecommerce: QR (20%), wallets (15%), P2P (6%)
- Canadian ecommerce: QR (25%), wallets (16%), P2P (7%)
These stats underscore the challenge of protecting real-time, customer-facing payment flows, which fraudsters can exploit faster than most legacy systems can adapt.
Manual fraud prevention remains widespread
Despite the growing complexity of fraud, 41% of North American merchants are still relying on manual fraud prevention methods, and only a small fraction have fully automated solutions in place.
- U.S. ecommerce: Just 6% have fully automated systems
- Canada: Only 3% of ecommerce businesses report full automation
This gap creates both operational strain and a widening vulnerability as fraudsters adopt AI-powered tools for identity theft, synthetic fraud, and real-time exploitation of weak points in the customer journey.
🧠 “It’s optimistic to think manual systems can keep up with fraudsters using generative AI,” said Maanas Godugunur, senior director at LexisNexis Risk Solutions.
Friction, fraud, and customer drop-off
Merchants are also struggling to strike the right balance between fraud control and customer experience.
According to the study:
- 63% of businesses report higher customer churn due to fraud
- 64% say fraud directly reduces conversion rates
- 36-37% of U.S. retail and ecommerce customers abandon transactions due to friction during account creation
Strict fraud checks—especially during onboarding—can lead to frustration, cart abandonment, or account closures. But weak checks open the door to bad actors. It’s a tough balancing act with high stakes on both ends.
Identity verification remains a major weak spot
Fraudsters are increasingly targeting identity verification during account creation—exploiting outdated, breach-exposed data systems.
- 41% of U.S. merchants report ID verification as their top challenge at new account creation
- That’s higher than issues reported at login (37%) or checkout (36%)
According to experts, many systems still rely on stolen or outdated personal data that is widely available on the dark web, and lack the layered authentication needed to validate customers in real time.
Visa data: Real-time payments and tokenization rise, but AI gaps remain
Separate findings from Visa’s 2025 Global eCommerce Payments & Fraud Report reveal more about the evolving fraud landscape globally:
- 80%+ of merchants saw an increase in real-time payments usage in the past year
- 6 in 10 now use tokenization to protect payment data and improve success rates
- But 80% still struggle to effectively use AI/ML tools for fraud management
- Nearly 90% now use compelling evidence tools to counter first-party fraud
These trends reflect both progress and pain points. While more businesses are adopting advanced tools, many lack the internal capability to fine-tune AI accuracy or adapt systems to catch more subtle, first-party threats.
What’s next for fraud prevention?
With the average cost of fraud now exceeding $4 for every $1 lost, and AI-powered fraud evolving faster than most businesses can respond, the ecommerce sector faces mounting pressure to:
- Modernize ID verification with behavioral biometrics and dynamic data checks
- Automate fraud detection with real-time AI systems, not just manual review
- Balance friction with smart risk-based authentication, especially at onboarding
- Close mobile channel gaps, where most fraud activity is shifting
Ultimately, the fight against fraud is no longer just about stopping losses—it’s about preserving customer trust, operational bandwidth, and growth in a digital-first market.
📥 Download the full LexisNexis report
📊 Explore Visa’s 2025 fraud trends
