Fraudsters constantly innovate new techniques and perfect current ones, forcing online sellers to keep up with the latest eCommerce fraud trends. To stay one step ahead, it’s important to know exactly what you are up against. Those that do not, risk disaster.
To help merchants try and stay one step ahead of the game, we’ve put together some statistics pulled from reliable sources around the web. Nothing is foolproof, but keeping them in mind when crafting an eCommerce fraud prevention strategy should help create a sense of urgency around fraud prevention and eliminate the blind spots that can spell disaster.
General Ecommerce Fraud Trends
1. The projection is for eCommerce sales to reach $632 billion by 2020, increasing online fraudsters’ incentives to innovate their tactics. In this climate, combatting new tactics requires merchants to remain up to date on how to best protect themselves. – Due
2. Unfortunately, many merchants still lag far behind. So far behind in fact that the projection is for CNP fraud grow 14% between now and 2023 — a statistic that highlights the urgency for merchants to do more as the target on their back grows larger. – Bank Info Security
3. If more action isn’t taken, it’s projected that CNP Fraud losses by banks and other merchants in the United States could total more than $12 billion by 2020. – Forbes
4. Research from EKN estimates that online merchants can spend as much as 23% of their operational budget on fraud and chargeback management. Such a high statistic suggests merchants need to do more to know how to detect chargebacks more effectively. – Radial
5. There’s even more urgency when you consider that 40% of consumers that commit chargeback fraud file a second fraudulent chargeback within 60 days — underscoring the need for merchants to keep track of customers that file chargebacks and prevent them from placing orders in the future. – Invesp
6. But despite that, just 14% of eComemrce manual order reviews were outsourced to a third party vendor expert in 2018 — an indication that far too many merchants ignore the top chargeback protection solutions available and continue to go it alone. – The Paypers
7. Shopify merchants especially should be paying attention. The platform’s increasing use of eCommerce automation shows the need for the top Shopify fraud protection apps to keep friction low while fighting chargebacks in order to meet consumers’ expectations. – Shopify
Mobile E-commerce Fraud
8. The mobile payment market is expect to expand to $4.5 billion by 2023 — meaning that merchants will be unable to ignore it. – Allied Market Research
9. Driving the point home even further is the fact that the dollar volume of mobile payments is expected to go over the $1 trillion mark in 2019 — demonstrating the need for merchants to think beyond desktop and start taking a mobile-specific approach to fraud prevention seriously. – Payments Source
10. All told, more than 82 million people in the US will use peer-to-peer (P2P) payments in 2018 — highlighting the degree to which mobile payments have gone mainstream. – Emarketer
11. And all of that is underscored by estimates that one-third of all cybercrime attacks in 2018 were made against mobile devices. – Threat Matrix
12. In fact, for every $1 that merchants lose to mobile payments fraud costs them as much as $3.34. Retailers could and should be taking the security of their mobile applications far more seriously than they currently do. – Bloomberg
13. The need for companies to do more on the consumer side can’t be understated. 60% of executives believe that mobile payments will fuel future growth — yet more than 50% of consumers believe it is a less secure method than cash. This suggests companies are not doing enough to convince their customers that their mobile payment applications are secure. – CardTrak
Account Takeover Fraud (ATO)
14. Losses from account takeover fraud (ATO) were $5.1 billion in 2018, suggesting that businesses must do a lot more to protect themselves against this kind of attack. – Javelin
15. The FBI actually estimates that Account Takeover Fraud (ATO) have cost businesses $12.5 billion dollars globally — including 41,058 victims in the US who lost nearly $3 billion. – Bank Info Security
17. As if that wasn’t enough, companies themselves lost more than $9 billion dollars to data-stealing phishing attacks worldwide, highlighting the need for merchants around the world to remember that even low-tech methods of fraud remain popular and effective. – Website Magazine
China E-commerce Fraud
18. In 2018, 16.6% of all retail sales in China were eCommerce sales – nearly double the rate in the United States (8.9%). Online merchants who let a fear of fraud in foreign markets keep them from selling abroad – or increase their e-Commerce false declines – are leaving a lot of money on the table. – Invesp
19. In addition, 67% of Chinese consumers say they prefer to use mobile payments when on vacation outside of China. – ACCEO Tender Retail
20. And that’s despite the fact that fraudsters hit 60% of Chinese consumers with some kind of security threat when using mobile payments. Just one more indicator of how popular mobile payments are amongst the Chinese, and the need for merchants looking to capture revenue share to feel comfortable offering them that option. – Payment Week
Emerging Markets E-commerce Fraud
21. And the Chinese market isn’t the only international market for merchants to pay attention to. The Indian market is expected to produce $51.2 billion in eCommerce revenue for online merchants in 2023, a sign of the growing importance of emerging markets to online sellers. – Statista
22. In addition, the countries with the largest year over year growth in eCommerce purchases are Russia (42%), Indonesia (45%), Vietnam (37%), and Israel (25%). – Payments Cards and Mobile
Most of these countries are currently considered to be “high risk” by merchants — further driving home the need to use one of the top eCommerce fraud protection solutions to accept as many orders as possible.
Future Ecommerce Fraud Trends
Preventing fraud is an ongoing battle, and merchants must keep up to date on developments so that they can protect themselves. However, knowledge is only one of the most important things to bring to the battle. The eCommerce fraud trends presented here are just a starting point to help inform future action.
Fraudster methodologies change constantly, and merchants must be ready to fight back. Merchants that use the resources provided as a launchpad for ongoing research into the tactics and eCommerce fraud prevention tools most likely to work for them will have the most success minimizing the impact of fraud on their bottom lines.
Looking Towards 2020
In 2020 we’ll be ushering in a new decade. With it, will undoubtedly be new eCommerce fraud types and solutions to address those threats. In order to give Merchants the heads-up, we spoke with 13 of the leading eCommerce fraud solutions and put together a full report into the fraud trends merchants can expect to face in the coming year. Download your free copy today of Merchant Fraud Journal’s 2020 Fraud Trends Report.