E-commerce fraud losses to exceed $48 billion in 2023: Juniper Research

E-commerce fraud is expected to cost merchants in excess of US$48 billion globally in 2023, up from over $41 billion in 2022 according to Juniper Research.

The 16 percent increase is projected to be accelerated by the uptake of risk-ridden alternative payment methods including digital wallets and buy-now-pay-later (BNPL).

According to a recent Juniper Research whitepaper, “From market data, it is clear that online payments are convenient and drive e-commerce. However, they have also created a playground for cybercriminals’ intent on circumventing the structures on which online payments rely. Trust, it seems, is breaking down.”

While the threat landscape evolves, attack vectors including silent fraud and cybersecurity vulnerabilities continue to create challenges for merchants.

Identity fraud is one method that has become more sophisticated and has grown in scope.

“Identity is sitting as a central pivot in the payments ecosystem for both customer engagement and fraud prevention. As identity has become intrinsically entwined with payments, the focus of the fraudster has been innovating around identity, or more precisely, identity data,” the report said.

“The assurance that a payment transaction is checked using a robust KYC/CDD (Know your Customer/Customer Due Diligence) process is vital in reducing fraud. However, ever-more sophisticated synthetic identity fraud is changing the metrics of KYC/CDD. Technologies such as deepfakes will be used to confuse the KYC process; making it vulnerable to deepfake identities and making fraudulent events harder to detect.”

Other types of fraud as outlined by Juniper include clean fraud, account takeover, friendly fraud, chargeback fraud, affiliate fraud, re-shipping, botnets, phishing, whaling, pharming, triangulation and page jacking.

“Online payment services are rapidly moving to, or are already active in, ecosystems of interrelated players and connected systems (including apps and APIs). The increase in digital payments as a reaction to social distancing during the pandemic has accelerated cyber targeting by fraudsters,” the authors state.

According to research author Nick Maynard, “To combat this fraud, e-commerce merchants must implement simple steps such as address verification, combined with risk-based scoring on transactions, which will allow merchants to best mitigate the massive fraud threats present.”