Credit fraud with small and medium-sized businesses has increased significantly in the last 12 months, and many financial institutions expect it to get worse, according to a new survey by Lexis Nexis Risk Solutions. The survey of lenders found that the average annual increase in SMB loan fraud was 14.5%, compared with 6.9% in 2021. Nearly three in four respondents expect the problem to worsen over the next year .
SME credit fraud losses likely accounted for up to 15% of total losses for surveyed institutions. The average value of SME credit fraud losses as a percentage of annual revenue dipped slightly to 5.5% from 6.2% in 2021, although it remained above pre-pandemic levels. The survey found that SMEs submit more than half of loan applications through online or mobile channels, with a similar proportion of fraud losses attributed to those channels. Still, banks and credit unions reported a small increase in in-person loan applications and fraud losses as most banks resumed normal in-person operations after the pandemic.