Small and Midsize Business Lending Fraud Rises Over the Past Year, with Lenders Anticipating Further Increases in the Year Ahead

Core Insights - SMB lending fraud has increased by nearly 14% year over year, with over 80% of lenders expecting further increases in the coming months [1][2][3] Group 1: Trends in SMB Lending Fraud - The increase in SMB lending fraud is moving away from pandemic influences, with most fraud being detected within the first month of new customer relationships [2] - Digital channels are the primary source of fraud, prompting 70% of organizations to adjust their fraud detection and mitigation strategies [3][4] Group 2: Fraud Detection and Prevention Strategies - Organizations are enhancing their fraud detection capabilities by integrating advanced identity solutions such as behavioral biometrics and real-time transaction scoring [4] - A shift from labor-centric to tech-driven fraud prevention is anticipated, with companies expecting overall losses between 6% and 10% due to fraud [4][5] Group 3: Recommendations for Reducing SMB Lending Fraud - Enhancing identity proofing and adopting a multi-layered approach to authentication are critical for effective fraud prevention [6][7] - Focusing on early-stage fraud detection during new account openings is essential, as many fraud cases can be identified through improved screening processes [6] Group 4: Methodology of the Study - The study surveyed 135 individuals from banks, credit unions, fintech/digital lenders, and payment processors responsible for risk and fraud assessments for SMB customers [8]