The Rising Tide of eCommerce Fraud: Key Statistics and How to Protect Your Business

eCommerce fraud is growing at an astronomical rate, with global losses expected to top $48 billion in 2023 according to Statista. This surge is being driven by the expanding volume of online transactions as more business moves digital, as well as ever more sophisticated fraudsters armed with stolen data and advanced technology.

While these staggering figures highlight the scope of the problem, many merchants still underestimate fraud risk. This article will break down the key statistics all eCommerce businesses need to understand, along with analysis on the trends fueling this crisis and expert advice on fraud prevention best practices.

By the Numbers: Global eCommerce Fraud Statistics

Let‘s start by looking at some eye-opening data points on the current fraud landscape:

• Losses are skyrocketing: As mentioned earlier, global eCommerce fraud losses reached $41 billion in 2022 and are projected to grow over 15% to $48 billion in 2023 Statista. To put those figures in perspective, that‘s roughly the GDP of Croatia or Qatar disappearing to criminals annually.
• Most merchants hit: Per cybersecurity firm Zipdo, an incredible 84% of eCommerce merchants faced fraud attacks in the past year. Far from a rare occurrence, fraud is now the norm for online sellers rather than the exception.
• 206K monthly attacks: Research from fraud prevention provider Stripe indicates eCommerce businesses deal with a staggering average of 206,000 cyberattack attempts monthly. While not all succeed, this still reflects relentless assault by fraudsters.
• Over 40% in North America: Though a global phenomenon, North America accounts for an outsized 42% of all eCommerce fraud based on data from identity graph firm Ekata. Factors like high consumer spending and advanced payments infrastructure make the region a top target.
• 57% via mobile: Fraud doesn‘t just occur on desktop—far from it. Zipdo found over half (57%) of 2020 attacks happened on mobile devices, reflecting both the growth of mCommerce and vulnerabilities introduced by apps, SMS texts and mobile browsing.

Clearly the scale of losses and ubiquity of attacks paint an alarming picture for merchants globally. Next let‘s drill down into some troubling trends within different areas of eCommerce fraud:

Friendly Fraud

So-called “friendly fraud”—where shoppers abuse lenient return policies to falsely claim items were damaged or not as described in order to secure refunds—is booming:

• 25% of merchandise returns estimated fraudulent Retail Dive
• $25B friendly fraud costs forecast by 2023 Zipdo
• Friendly fraud comprising 1 in 5 disputes Stripe via BBB

Identity Fraud

Attacks using stolen consumer identities and account credentials are likewise rampant, with fraudsters easily defeating simple passwords:

• 35% of fraud tied to account takeovers in 2021 Zipdo
• As many as 80% of account credentials compromised via data breaches Verizon via Stripe

Chargeback & Payment Fraud

Chargeback scams often go hand-in-hand with friendly fraud, saddling merchants not just with refunds but hefty processing fees:

• $308 average merchant loss per $100 chargeback WebTribunal
• 43% of shoppers report falling victim to payment fraud Exploding Topics

Why Fraud is Getting Worse for eCommerce Businesses

These stats highlight how serious and endemic fraud has become for online retail. Understanding the forces fueling this trend is key to combatting it. Here are three major factors behind the surge:

1. Explosive eCommerce Growth

With global eCommerce sales topping $5 trillion in 2021 and projected to nearly double to $9 trillion by 2025, digital shopping presents rich targets for criminals—particularly small and midsize merchants still building their fraud capabilities.

2. Consumer Behavior Shifts

The pandemic dramatically accelerated adoption of digital payments, online shopping, and mCommerce, with eCommerce transaction values rising over 20% in 2020 alone according to Stripe. As billions of consumers flock online, more fall prey to sophisticated scams.

3. Advancing Fraud Technology

On the other side, AI and automation tools allow criminals to enact fraud faster and more efficiently than ever—attacking at machine speeds. Hacking also grows more tailored as fraudsters stunt on detailed shopper data. Expect attacks to only accelerate as technology inevitably advances in years ahead.

Best Practices: Mitigating eCommerce Fraud

Though many threats are beyond any one merchant‘s full control, retailers can take proactive measures to significantly combat fraud:

Advanced Authentication

• Implement multi-factor authentication: Requiring an additional login step like one-time codes or biometrics blocks criminals even if main passwords compromised.
• Leverage AI review: Solutions can automatically flag orders with suspicious identifiers like device profile mismatches.

Activity Monitoring

• Deploy transaction oversight solutions to spot abnormalities like dramatically different shipping and billing locations or unusual purchase timing/volumes. Set rules to notify staff for manual review.
• Detailed logs aid investigation when issues occur to determine what happened and prevent repeat in future. Capture IP addresses, number of login attempts, device data and more.

Customer Education

• Share fraud prevention tips in FAQs and across touchpoints like email and mobile alerts when suspicious activity detected. Helps legit users understand process while deterring criminal abuse.
• Train staff across sales, service and finance to recognize warning signs like use of gift cards, urgent shipping requests and inconsistencies across buyer details. Empower them to flag issues for additional verification.

The bottom line is merchants must make fraud prevention central to daily operations rather than an afterthought. Though eCommerce growth brings immense opportunity, it also introduces risks requiring mitigation to build sustainable online business. The gap is widening between retailers taking proactive precautions versus those lagging behind fraud technology and paying the price through chargebacks, fines and reputation damage.

By understanding the modern fraud landscape and deploying tools like enhanced authentication, activity monitoring and customer education, merchants can help turn the tide to stay profitable while delivering reliable customer experiences. The threat of fraud will only increase, but the stakes have never been higher for brands to ensure security keeps pace.