Lenders reported a greater amount of fraud against their products for small and medium-sized businesses (SMB) in 2023 compared to 2022, according to
In the survey of 135 banks, credit unions, digital lenders and payments processors, 82% of respondents said the level of SMB fraud had increased over the past 12 months. The survey was conducted during October and November 2023, though the data was published this week.
The rate of increase is on par with previous years. In a 2022 survey by LexisNexis Risk Solutions, 84% of respondents reported an increase in SMB fraud. The previous year, it was 73%.
LexisNexis Risk Solutions retained market research firm KS&R to conduct the research. The firm asked financial services firms surveyed simply whether “SMB lending fraud targeting the firm increased or decreased and by how much,” according to the report. The question did not specify whether the amount was the number of attempted fraud incidents, the amount of money lost to fraud, or any other metrics.
Compared to 2022, respondents in 2023 reported a statistically significant increase in the amount of SMB lending fraud they detected within the first month of the customer relationship, from 41% to 59%. These respondents detected the fraud after account origination but before the account had been charged off.
The majority of respondents (56%) said they suspect between 6% and 10% of their company’s overall losses were because of SMB lending fraud.
The broader picture of fraud against U.S. lenders has indeed worsened in recent years.
The number of suspicious activity reports (SAR) filed with the Financial Crimes Enforcement Network (FinCEN) by depository institutions and finance companies increased by just under 10% from 2022 to 2023.
