E-commerce fraud is growing fast and financially impacting businesses across the globe, according to the Global Fraud Trends 2023 survey from Ravelin, the cybersecurity solutions provider.
In the last twelve months, merchants have seen a huge leap in online payment fraud (up 59 per cent), account takeover (up 51 per cent) and promotion abuse (up 52 per cent). Refund abuse (up 53 per cent) and customer fraud/friendly fraud (up 40 per cent) have also shot up.
Merchants are now throwing more and more money at the crisis. In turn, they are expanding anti-fraud teams in a bid to mitigate losses.
Three-quarters (75 per cent) of all online merchants say fraud budgets will grow this year (global average figure.) In the UK 62 per cent will be spending more on managing fraud. This rises to 70 per cent in France, 74 per cent in Germany, 69 per cent in the US, and 84 per cent in Canada.
In the UK, 58 per cent of online businesses polled plan to grow their fraud teams in the next twelve months. In other parts of the world, the trend is even more pronounced. Eighty per cent of merchants in Germany, 72 per cent in the US, and 86 per cent in Australia expect teams to grow in size.
New approaches are urgently needed to minimise losses
But when it comes to tools for tackling fraudulent crime most businesses (78 per cent) opt for in-house solutions. These, however, are expensive to maintain and quickly become unsustainable as a business grows. In the UK the figure is 80 per cent while in France it’s 81 per cent and in Germany 77 per cent.
Ravelin CEO, Martin Sweeney said: “Over the years merchants have built up fraud investigation teams which they’re justifiably proud of. But fraud continues to grow and mutate: simply throwing more people and money at the problem won’t make it go away. Losses will continue to grow.
“Businesses need to get on the front foot managing fraud: using automation to nip fraudulent transactions in the bud. Better automation helps teams scale and frees up fraud investigators from mundane tasks enabling them to focus on informing product development, identifying other sources of profit erosion, and other more important strategic tasks that drive growth. With the economy in an uncertain place, enabling growth must become the priority.”
The most effective tools for fighting crime
Machine learning and two-factor authentication (2FA) are being adopted more regularly by e-commerce businesses to help with the issue. Almost half (48 per cent) of UK businesses say ML is one of the most effective tools in their arsenal. Three-quarters (75 per cent) of UK merchants say 2FA is crucial.
From feedback across regions, the survey found that there isn’t a singular ‘one and done’ fraud strategy that’s most effective. Different solutions are effective at fighting different frauds, and having a robust tool stack allows teams to consider the complex nature of online crime.
The survey, which spoke to 1900 global professionals, also examines the increase of ‘newer’ types of fraud which are prevalent globally.
Policy abuse is experienced by 40 per cent of businesses spoken to. The UK has the biggest problem with this type of ‘friendly fraud’ with over half (52 per cent) of merchants experiencing it.
Reseller and bot activity sits at 53 per cent globally whereas ‘fraud as a service’ schemes were an issue for 56 per cent of those spoken to. Additionally, social engineering via customer service was experienced by 45 per cent of the companies who took part in the survey.