Ecommerce Fraud Statistics and Trends
The last three years have been a turbulent time in the world with a global pandemic affecting every aspect of our lives. This has been followed by more concern about how stable our futures are looking with 93% of Europeans reported as worried about the rising cost of living according to a recent European Parliamentary survey.
Despite this, the German B2C ecommerce market was forecast to grow to €97.4bn in 2022 and ecommerce sales hit €129bn in France in 2021. Looking forward to 2023, economic growth may be possible but Deutsche Welle (DW) recently reported that Europe may avoid a recession but this is still uncertain.
For ecommerce businesses, the pandemic increased the number of people turning to the internet for their shopping needs, as well as the amount of money spent online. But this has in turn brought about an increase in ecommerce fraud and scams.
As consumers seek a bargain and businesses look to protect and grow their income at the same time, all parties become vulnerable to fraud.
To counter the anticipated trend of increasing fraud, the ecommerce fraud detection and prevention market size worldwide is predicted to grow 17% to $48bn in 2023 and another 20.3% into 2024.
How important is it to businesses to prevent ecommerce fraud?
Not only does fraudulent activity directly impact revenue, but it can also influence how customers feel about a business and whether they have enough trust in an online shop to make a purchase.
A 2021 survey of online shoppers made sobering reading for businesses, showing that only a third of shoppers trust businesses' capacity to prevent ecommerce fraud. This impact on a brand’s reputation is growing in importance to business leaders, who recognise the potential damage to consumer trust and loyalty.
Businesses are quickly taking notice, 43% saying in a 2022 survey that they were concerned about the impact of ecommerce fraud on brand reputation, up from just 26% in 2020.
The tricky part for ecommerce businesses is that improving fraud checks can naturally introduce friction into the purchasing process, with webshops having to walk a fine line between great customer experience and tighter security.
Ecommerce fraud statistics
Regardless of age, size or industry, businesses need to be aware of how they can fall victim to ecommerce fraud.
New businesses and SMEs are more likely to be targeted by fraudsters
It is new businesses and small and medium businesses who are more likely to be targets of fraud because they may not have the resources or experience to identify fraudulent transactions right away.
UK Finance claims that small businesses face almost four million cases of cybercrime each year, predominantly focused on malware and fraudulent payments.
Ecommerce fraud is rising significantly in Europe
According to Research and Markets, in Germany, two out of every three ecommerce companies have identified a noticeable rise in fraudulent activities.
This is corroborated across numerous surveys and research pieces across Europe. For example, in Switzerland, over 85% of online retailers have reported that they have been victims of fraud.
The cost of chargebacks for ecommerce businesses
The cost of just handing a chargeback can be between €15 and €60 plus the value of the refund but these charges can certainly go higher according to Seon.io.
While the chargeback service is law in the UK provided certain conditions are met, chargebacks are a little different in the rest of Europe compared to the UK. There is no direct equivalent to the UK’s Section 75 of the Consumer Credit Act, but a ‘chargeback’ procedure provides similar protections but is not quite as comprehensive as the UK. Credit card companies have their own consumer fraud protections in place which businesses need to be aware of.
If a business has a “too high” rate of chargebacks, then companies such as Visa or Mastercard may put them on a monitoring programme or even increase their payments.
Countries with the greatest risk of ecommerce fraud
France, the UK and Spain are the countries that are at the greatest risk of ecommerce fraud attacks. when using basis points as the metric to demonstrate the level of severity of the increase in the threat.
In France, data from Euromonitor estimates that more than seven cents in every €100 spent on card transactions is fraudulent, while in the UK and Spain that figure is six and four cents respectively.
Fifth on the list is The Netherlands, with a rating of three cents in every €100 subject to fraud. Though much lower than the UK and France, it does represent an 18% year-on-year increase - the highest of any European nation in the study.
Ecommerce fraud trends in 2023
Thanks to growing awareness of the threat that fraud poses to consumers and businesses, there has been a robust response from companies looking to stop ecommerce crime at every possible turn.
A 2021 survey of merchants worldwide asked how important ecommerce fraud management was to their overall strategy, with 89% of respondents rating it as either “very” or “extremely” important. With this enhanced awareness in mind, here are some of the ecommerce fraud trends that businesses should be aware of.
B2B fraud is on the rise
Individuals have long been the target of fraudsters. However, businesses are reporting that they are seeing instances of fraud by other means. Whether this is through criminals impersonating another business to steal money, triangulation schemes, invoice fraud or transaction laundering, it is not just B2C ecommerce transactions that require business owners to be vigilant.
Increased “friendly fraud”
Friendly fraud happens when consumers report legitimate transactions as fraud either mistakenly, due to details being stolen or with the intent to defraud. Instances of friendly fraud have risen between 20% and 30% in 2022 across global markets according to Axios.
Using machine learning and AI to identify fraudulent transactions
AI and machine learning are becoming ever more powerful tools with which to tackle fraud. With fraudsters and scammers adapting around “rules” that currently exist that help businesses identify a fraudulent transaction, machine learning will process data at scale to identify patterns that previously may never have been spotted.
Increase in Account Take Over (ATO) and personal information being stolen
Attacks on individuals are becoming more common with more data points available for sale on those targeted. Passports and even fingerprints have previously available for sale online. The threat of malware and other methods to steal personal data has never gone away even if it is not as heavily publicised anymore. ATO fraud attacks rose 131% in H1 2022 compared to the same six-month period in 2021, a trend that’s set to continue in 2023.
More consumers relying on digital wallets
Younger people are growing in their reliance on digital wallets for convenience and ease in both the online and offline world.
With this comes new ways for criminals to steal money and personal data, as ecommerce businesses are not receiving the same data that allows them to verify transactions in the same way as they would if payment information was manually entered.
Secure ecommerce payments with Mollie
Mollie is one of Europe’s leading payment service providers, and is fully PCI-DSS level 1 certified, offering safe and secure internet payments for your business. Our extremely well-protected data centres are watched over by our specialised NOC team, guaranteeing the safe processing of sensitive customer data.
Real-time monitoring of accounts and easy access to any payment in the Mollie dashboard means you can stay on top of every transaction. Learn more about the security features of Mollie or create an account for your business to get started today.