Online payment fraud losses to exceed $343 billion: Juniper

Online merchant losses will exceed $343 billion between 2023 and 2027 according to a new Juniper study.

Online payment fraud includes losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases like airline ticketing. Fraudster attacks can include phishing, business email compromise and socially engineered fraud.

As a comparison, this equates to over 350 percent of Apple’s reported net income in the 2021 fiscal year; showing the massive extent of these losses.

The Juniper report, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2022-2027 explains that these losses are partly being driven by fraudster innovation in areas such as account takeover fraud, where a user’s account is hijacked. This is despite the wide employment of identity verification measures.

The research found that in order to combat rising fraud, fraud prevention vendors must orchestrate the right mix of verification tools, at the most effective point in the customer journey, to best protect users, but that this will require significant capabilities to achieve.

Report author Nick Maynard explained, “Fundamentally, no two online transactions are the same, so the way transactions are secured cannot follow a one-size-fits-all solution.

“Payment fraud detection and prevention vendors must build a multitude of verification capabilities, and intelligently orchestrate different solutions depending on circumstances, in order to correctly protect both merchants and users.”

The research identified physical goods purchases as the largest single source of losses; accounting for 49 percent of cumulative online payment fraud losses globally over the next 5 years, growing by 110 percent.

Lax address verification processes in developing markets are a major fraud risk, with fraudsters targeting physical goods specifically, due to their resell potential. As such, it recommends that merchants adopt strong anti-fraud measures, including multiple sources of address verification and multi-factor authentication to reduce fraudulent incidents for physical goods merchants.

Earlier this year, Juniper released a report showing that digital advertising fraud will cost brands $68 billion globally this year, rising from $59 billion in 2021. The figures are contained in a new study from Juniper Research which identifies the US, Japan, China, South Korea and the UK as the five countries most impacted by advertising fraud.

The ACCC released its Targeting Scams report earlier this month showing over $2 billion was lost in 2021 from scams.