E-commerce fraud grows in scale and sophistication
Online retailers face a rapidly accelerating threat of fraud and cybercrime.
According to the new Signifiyd "State of Fraud and Abuse 2024" study, the increasing involvement of global crime rings and use of generative AI are resulting in an "industrialization" of online fraud. Attempts at placing fraudulent orders increased 19% in the first half of 2024 compared to the previous year, according to Signifyd data.
Looking at year-over-year fluctuations in the dollar value of false claims that an e-commerce order didn’t arrive or arrived in poor condition between January and June 2024, the study found that it spiked 15% in both April and June, rose 9% in May, climbed 3% in February and stayed flat in January while actually dropping 9% in March.
And AI-based bot-driven fraud attacks against retailers increased every month year-over-year between August 2022 and April 2024, peaking with a 137% spike in January 2024.
In addition, 13% of online orders now include signs of address manipulation, a tactic that attempts to evade machine learning models’ ability to recognize addresses with a history of fraud. Cases of attempted reshipper fraud are up 50% in 2024, which Signifyd analysis suggests is a sign that crime rings are increasingly relying on go-betweens to hide their role in online orders while moving stolen goods out of the U.S.
[READ MORE: Study: New technology leading to increase in fraud]
Other growing fraud trends detected by Signifyd include “fraud-as-a-service” operations through which fraud rings commit return and refund fraud on behalf of consumers for a cut of the profits.
"The growing prominence of global fraud rings is not new, but the acceleration of that growth and the adoption of increasingly sophisticated tactics and operations is worrisome for ecommerce merchants," Signifyd CEO Raj Ramanand said. "The challenge for retailers is to avoid falling prey to these sophisticated attacks while still providing a best-in-class customer experience and preserving their hard-earned customer lifetime value. Fortunately, fraud protection leaders continue to innovate and add the machine learning and data science resources needed to stay a step ahead."
