E-commerce fraud to surpass $20 billion this year

Research finds merchants need to do more to implement fraud prevention

E-commerce fraud has increased by almost a fifth in a single year, according to the latest from Juniper Research. 

Between 2020 and 2021, e-commerce fraud grew by 18% from $17.5 billion to over $20 billion as criminals focused on the COVID-19-fueled surge in online shopping.

According to the report, this means fraudsters exposed insecure fraud-mitigation processes from unfamiliar and unprepared merchants for the continuing challenges in this market.

The research found that while merchants want to reduce fraud rates from their current levels, they’ve been reluctant to introduce extra friction into the checkout process. The report identified that clear messaging around security checks and automated behavioral analytics leveraging artificial intelligence (AI) is key to preserving the user experience.

“While the need for security is greater than ever, the competitive e-commerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates,” said co-author, Susan Morrow.

Researchers claimed China will be the largest single e-commerce fraud market in the world, accounting for over 40% of the worldwide e-commerce fraud losses in 2025. That would amount to over $12 billion in fraud. The report’s authors cited China’s massive e-commerce market and relative lack of fraud detection and prevention platform deployment as the key drivers.

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Juniper Research also recommended merchants operating in China should invest in fraud detection and prevention now. Otherwise, they’ll increasingly face damage to their already slim operating margins.

The research echoes similar findings by fraud-detection company Ravelin. According to its Retail Ecommerce Fraud & Payments Survey released earlier this month, 76% of retailers predict their budget to tackle fraud will increase in the next 12 months, with one in five anticipating a “significant” increase.

Ravelin CIO Mairtin O’Riada said the COVID-19 pandemic created a “petri dish” that is growing volumes of fraud.

“Retailers are scrambling to drive e-commerce and are handling extremely high volumes of transactions online, while also trying to fulfill a growing number of online deliveries. At the same time, honest consumers and avid fraudsters are feeling the pinch of a shrunken economy — many have lost their jobs and money is tight,” O’Riada told HelpNetSecurity.

“Trying to detect fraud manually under these conditions is a difficult and expensive undertaking. Technology that can be built specifically to your needs can help detect fraud at the moment and help retailers to mitigate the effects of fraud significantly — helping to protect profit margins at a time they’re needed most.”

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