E-commerce continues to grow across the globe, with annual retail e-commerce sales predicted to grow by around $3trillion between 2021 and 2028. But as the volume of e-commerce transactions grows, so too will the threat of online payment fraud, Juniper Research has warned.
In total, merchant losses from e-commerce payment fraud could exceed $362billion globally between 2023 to 2028, with predicted losses of $91billion alone in 2028.
One of the many reasons that fraudsters continue to successfully exploit vulnerabilities across all aspects of e-commerce is that they are constantly adapting to global situations. Juniper revealed that conflict between Ukraine and Russia has been used to scam residents in countries like the UK by sending them links to a false charity website to donate money. Instead, the fraudster aims to steal bank details and empty their account.
Quarterly fraud analysis from global information and insights provider TransUnion found that the rate of suspected digital fraud attempts coming from the UK increased by 32 per cent when comparing Q2 2021 and Q2 2022, with financial services and insurance seeing the largest increases.
In financial services, the rate of suspected digital fraud attempts has more than doubled in this period, as fraudsters capitalise on the digital acceleration seen during the pandemic and beyond.
Identity theft has also emerged as a recurring issue worldwide, particularly in the US which has seen millions of dollars of damage each year as a result. Despite this, consumers remain unaware of this change primarily due to the advertising of credit bureaus, some ID theft service companies and a general lack of news coverage.
‘Prevention providers must educate their clients in the importance of data sharing’
Research author Cara Malone, discussed the report’s findings: “Fraud detection and prevention providers must educate their clients in the importance of data sharing, in order for the highest accuracy within their solutions.
“This is increasingly important with the growing use of AI, as it utilises a variety of data to examine patterns within fraud, which is extremely advantageous in a space where fraudsters usually attack at scale, rather than attacking a specific customer.”
Buy now pay later (BNPL) services have also become much more prevalent thanks to a rise in e-commerce transactions as well as rising interest rates in many regions worldwide.
However, the increase of BNPL has also meant the beginning of BNPL related fraud. Fraudsters have been gaining access to existing BNPLe accounts and use it to make unauthorised purchases, or use synthetic identity information to open a brand new BNPL account.
In the report, Malone details how fraudsters will continue to explore new ways to exploit the growth of BNPL. The use of AI could also help conduct more extensive background checks, to reduce the number of fraudulent accounts that are approved
