Retail and e-commerce merchants face a steep cost from fraud, with losses averaging $4.61 for every $1 stolen in the U.S., according to the 2025 LexisNexis True Cost of Fraud Study. Canadian businesses see a similar ratio, with $4.52 lost for each dollar of fraud.

The study, surveying 569 risk and fraud executives across both countries, reveals that fraud costs extend beyond direct financial hits, including operational, reputational, and compliance impacts. These indirect losses have more than doubled since 2016’s estimate of $2.40 per $1 of fraud, reflecting rising complexity and expense in combating fraud.

Online transactions bear the brunt of fraud costs, accounting for over half of the burden in U.S. and Canadian e-commerce markets. Mobile payments—via QR codes, digital wallets, and peer-to-peer systems—also contribute significantly, with QR code fraud notably rising in both retail and e-commerce sectors.

Experts caution against over-reliance on manual fraud detection systems, especially as fraudsters employ generative AI to evade controls. Balancing security with a seamless customer experience remains critical, as overly aggressive fraud prevention can drive customers away.

Identity verification gaps present another major challenge, with compromised personal data increasingly exploited by fraudsters. Experts emphasize that accurately confirming customer identities is a vital but complex step in reducing fraud.

As fraud grows more sophisticated, retailers are urged to adopt dynamic, AI-powered solutions to protect revenue while preserving user experience.

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