Fraud rate

A measure of how common deceitful activity is in a set of transactions. It is calculated as the ratio of fraudulent transactions to the total number of transactions during a specific period.

Example

If an online retailer processes 10,000 transactions in a month and identifies 50 of them as fraudulent, the fraud rate is 50 / 10,000 = 0.005, or 0.5%. This percentage helps the retailer assess how well its fraud prevention measures are working and where they need to improve. A high fraud rate may show a need for stronger security measures or better transaction monitoring.