The state of transactional fraud

Fraud’s impact on finances, operations, and reputation

Fraud's impact on finances, operations, and reputation

Money matters – but it’s not the only thing

  • The impact of fraud is complex and far-reaching. It impacts companies on many levels and can often kickstart a spiral of disastrous consequences.

  • CPaaS and CCaaS providers have to deal with revenue losses, but also further, less direct effects in the event of fraud.

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Financial impact

Lost revenues are the most frequent and most obvious way of measuring the negative influence of fraud on both customers and companies. In fact, financial losses were the top concern in our survey with 75% of respondents naming them as the biggest priority. It’s not hard to understand why this is. In the US, a record $10bn was lost in consumer fraud in 2023, while the CFCA reported an estimated $39 billion in telecommunications fraud in the same year, just to zone in on one of many highly impacted industries.

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Reputational damage

Aside from the immediate financial losses, there are longer-term and equally significant effects that CCaaS and CPaaS providers experience. For many respondents (62%), the most serious consequence was tarnishing the company’s reputation. For communications service providers who deal with vast amounts of sensitive information, a data leak can lead to a catastrophic loss of trust – and send customers to their competitors.

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Operational costs

Operational damage was the third most important priority, with a 62% of respondents choosing them as the most important consequence – and understandably so. Fraudsters can shut entire systems down and halt a company’s operations for substantial periods of time, causing further financial losses. Any downtime in services related to fraud can also frustrate customers and negatively impact customer relationships.

Eroding customer trust

Alongside the direct impact on the business, fraud’s impact on customers cannot be ignored, either. Continued fraud attempts and the eventual compromise of customer data, or worse, funds, can erode customers’ trust in a company and lead them to competitors.

  • Companies seem to be aware of the potentially catastrophic influence of fraud on customers. 48% of respondents say that being a victim of fraud would have a significant impact on their customers’ trust in them. Just like fraud itself, the impact on customers also seems to have grown: 58% of respondents say that their customers are more concerned with fraud now than 5 years ago.

  • The issue seems to be present from the outset, with 35% of customers saying that fraud attempts have a significant impact on their ability to onboard new customers. For 29% of respondents, the impact is severe.

  • Of course, customer trust is important in every sector. But for CPaaS and CCaaS providers, whose product is customer communications, and who aim to provide direct assistance to customers quickly and effectively, the significance of a positive customer experience is pivotal. Leaders in the space have to do their utmost to ensure that customers – and their data – are protected, or risk losing them to competition.

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A complex problem requires complex solutions

The results demonstrate the complexity of fraud and the great variety of approaches industry leaders have to it. Evidently, it is highly preferable to prevent fraud from happening rather than attempt to mitigate the far-reaching after-effects.

  • At the same time, when an organization does fall victim to fraud, it is extremely important to have a comprehensive disaster recovery plan that can curb the domino effect of an incident.

  • Against a backdrop of more and more pervasive fraud attempts and increasingly negative impacts on employees and customers, it is vital that companies have a reliable solution in place to minimize fraud.

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