U.S. Retailers Face $191 Billion in Fraud Losses Each Year

LexisNexis True Cost of Fraud Study Reveals that Retail Merchants Experience 20
Times Higher Total Fraud Losses than Consumers
NEW YORK--(Business Wire)--
U.S. merchants are incurring $191 billion in fraud losses each year, according
to a new report released today by LexisNexis® Risk Solutions. Among the
findings, the 2009 LexisNexis® True Cost of Fraud Benchmark Study discovered
that merchants must absorb nearly 10 times the identity fraud cost incurred by
financial institutions. Retail merchants experience a massive $100 billion in
losses solely attributed to identity fraud, which escalates to $191 billion when
factoring in the additional cost of lost and stolen merchandise. The study also
found that merchant fraud losses amounted to more than 20 times the total value
of consumer fraud victim losses which totaled approximately $4.8 billion in
2008.

Developed in conjunction with Javelin Strategy & Research, the study examines
how U.S. retail fraud affects merchants, financial institutions and consumers.
The full study is available on the LexisNexis® Risk Solutions Web site at:
www.risk.lexisnexis.com.

"The impact of retail fraud is multifaceted and far-reaching, as this crime
claims multiple victims," said Dennis Becker, LexisNexis Risk Solutions vice
president, corporate markets. "We are seeing significant increases in identity
fraud overall as well as increases in typical fraud categories such as
chargebacks," said Becker. "With the economic downturn and increasing
sophistication in criminal fraud methods, it is crucial that merchants and
financial institutions work together to mitigate fraud."

According to the study, retail merchants are absorbing the vast majority of the
costs associated with fraud. Among the numerous fraud types affecting merchants,
identity fraud or fraudulent transactions made up the bulk of fraud from a cost
standpoint, representing 52 percent of total fraud losses. In addition, certain
merchant segments revealed a higher prevalence of fraudulent transactions such
as large eCommerce retailers, of which 40 percent saw an upsurge. Digital goods
merchants attributed 54 percent of their fraud loss to unauthorized purchases,
while merchants in telecom, social networking industries and online gaming
reported 64 percent to 67 percent of their total annual fraud loss as the result
of identity fraud.

The report also found that:

* One in five merchants experienced an increase in unauthorized transactions
associated with identity fraud;
* Credit card crimes continued to rise sharply, but alternative payments (i.e.
online and mobile payments) represented a troubling new source of losses for
large merchants;
* Friendly fraud-where a consumer makes an online purchase with their credit
card, then issues a chargeback after receiving the purchase, claiming the
purchase was never delivered-accounted for more than one-third of the total
fraud for online-accepting merchants;
* Merchants showed low satisfaction for fraud technology solutions; and
* Retail merchants sought more education and improved industry standards as they
battled the cost of fraud.

"By taking a careful assessment of current fraud prevention tools and
technologies and seeking out more education and information, merchants can help
to mitigate and detect fraudulent transactions," said James Van Dyke, president
of Javelin Strategy & Research.

In early 2009, LexisNexis Risk Solutions retained Javelin Strategy & Research to
deploy a comprehensive quantitative study on the effects of retail fraud. A
29-question online survey was sent to a retail merchant panel comprising 1,009
risk and fraud decision-makers and influencers. The merchant panel includes
individuals from companies of all sizes, industry segments, channels and payment
methods. The study also draws on identity fraud victim data from a telephone
interview survey of more than 4,800 U.S. adults including 487 fraud victims
representative of the U.S. population. The Merchant Risk Council (MRC) also
provided input and comment on the study prior to its release.

"The MRC is working with a wide variety of multi-channel and e-Commerce
merchants with the stated mission of mitigating losses stemming from
card-not-present fraud," said Tom Donlea, MRC Executive Director. "Research
programs such as this are valuable to the merchant community looking to
benchmark their verification and authentication processes and fraud prevention
tools that thwart such nefarious activity."

About Javelin Strategy & Research

Javelin provides superior direction on key facts and forces that materially
determine the success of customer-facing financial services, payments and
security initiatives. Our advantages are rigorous process, independent position,
and expert people. For more information about this or other Javelin reports,
please visit www.javelinstrategy.com/research or contact Elizabeth Travers at
(925) 225-9100 ext. 31 or etravers@javelinstrategy.com.

About LexisNexis

LexisNexis® (www.lexisnexis.com) is a leading global provider of content-enabled
workflow solutions designed specifically for professionals in the legal, risk
management, corporate, government, law enforcement, accounting and academic
markets. LexisNexis originally pioneered online information with its Lexis and
Nexis services. A member of Reed Elsevier [NYSE: ENL; NYSE: RUK]
(www.reedelsevier.com), LexisNexis serves customers in more than 100 countries
with 18,000 employees worldwide.

About LexisNexis Risk Solutions

LexisNexis® Risk Solutions is the leader in providing essential information that
helps advance industry and society. Building on the legacy of proven LexisNexis
services from the past 30 years, our cutting-edge technology, unique data and
advanced scoring analytics provide total solutions that address evolving client
needs in the risk sector while upholding high standards of security and privacy.
LexisNexis Risk Solutions serves commercial organizations and government
agencies and is comprised of several affiliated corporations, each offering
premier customer-focused solutions. For more information, visit
risk.lexisnexis.com.

Media Contact
LexisNexis Risk Solutions
Fiona McCaul, 678-694-3651
fiona.mccaul@lexisnexis.com

Copyright Business Wire 2009