The cost of ecommerce fraud will rise from $44bn in 2024 to $107bn in 2029; a growth of 141%, fuelled by AI across the whole ecommerce ecosystem.
According to the latest study from Juniper Research, the use of deepfakes created using AI to defeat verification systems being a key threat. This, combined with rising levels of ‘friendly fraud’ – where fraud is committed by the customer themselves, such as refund fraud – is increasingly threatening merchant profitability.
An extract from the new report, Global Merchant Fraud Prevention Market 2024-2029, is now available as a free download.
AI use by fraudsters driving risk
AI is enabling fraudsters to remain ahead of security measures and commit sophisticated attacks on a greater scale. By creating credible messages and a large number of synthetic identities, AI is facilitating higher quality attacks with an unprecedented frequency. These technologies are also highly scalable; empowering fraudsters to heavily automate their attacks and overwhelm rules-based prevention systems.
Report author Thomas Wilson says: “Ecommerce merchants must seek to integrate fraud prevention systems that offer AI capabilities to quickly identify emerging tactics. This will prove especially important in developed markets, where larger merchants are at higher risk of being targeted for fraud, such as testing stolen credit cards.”
On the friendly fraud front, it is worth noting that some of this can be the fault of the merchant themselves. A recent study by Visa using survey data from Chargebacks911, chargebacks stemming from confusing billing descriptors are costing U.K. merchants more than £128 million each year.
How should merchants react?
Merchants are employing these same technologies to recognise emerging fraud patterns and react in real-time. Merchants must work to incorporate biometric identification into checkout processes to further secure transactions. By using methods such as liveness detection, merchants will be able to protect their business and customers from increasingly sophisticated AI deepfake fraud attempts.
