A new study by Juniper Research, a leading authority on fintech and payment markets, has projected that eCommerce fraud globally will rise from $44.3 billion in 2024 to a staggering $107 billion by 2029, marking a growth of 141%.
This sharp increase is attributed to the growing use of artificial intelligence (AI) by fraudsters, enabling more sophisticated and large-scale attacks across the eCommerce ecosystem.
The report highlights how AI, particularly through the creation of deepfakes, poses a significant threat to online merchants by defeating verification systems.
Additionally, the rise of “friendly fraud,” where customers themselves commit fraud, such as through refund scams, is becoming an increasing concern, further threatening the profitability of merchants.
Fraudsters ahead with AI
According to the report, AI technology has allowed fraudsters to stay ahead of security measures, creating highly credible messages and synthetic identities to execute sophisticated attacks.
It added that the scalability of AI also empowers fraudsters to automate their schemes and overwhelm traditional, rules-based fraud prevention systems.
“eCommerce merchants must seek to integrate fraud prevention systems that offer AI capabilities to quickly identify emerging tactics.
“This is especially crucial in developed markets, where larger merchants are at a higher risk of fraud, such as the testing of stolen credit cards,” said Thomas Wilson, the report’s author.
Online marketplace as target for fraudsters
The report further warns that online marketplaces have become prime targets for fraudsters, particularly since the rapid growth of eCommerce following the COVID-19 pandemic.
- It noted that the expansion of online retail has created more opportunities for fraudsters to exploit weaknesses in merchant systems, with sensitive customer information being an attractive target.
- Juniper Research in the report emphasized that fraud detection and prevention measures are critical to merchants across many industries since they represent ways of preventing unnecessary revenue loss through things such as chargebacks and order reprocessing.
“It is pivotal that anti-fraud measures evolve, as fraudsters are always changing the tactics they use to maneuver around current measures.
“For merchants and businesses, fraud detection and prevention refers to the merchant’s ability to monitor all transactions and payments that the business takes effectively and safely; identifying any suspicious activity quickly and taking appropriate action,” it stated.
How merchants are responding to the threat
The report revealed that merchants globally are increasingly turning to AI-driven fraud detection systems to recognize emerging fraud patterns and react in real-time.
It added that biometric identification methods, such as liveness detection at checkout, are also being adopted to secure transactions and prevent fraudsters from using deepfake technology to mimic legitimate customers.
What you should know
In Nigeria, industry experts have identified the issue of fraud as a major obstacle to eCommerce growth in the country.
- According to them, this is discouraging many Nigerians from making purchases online, and those who patronize e-commerce platforms are only willing to make a purchase if there is the option of pay-on-delivery.
- They noted that while customers are concerned about their payment details being used to defraud them, merchants, on the other hand, are struggling with identity theft, chargeback fraud, and man-in-the-middle attacks.