Fraudulent ecommerce transactions for physical goods is set to hit a whopping $10 billion globally in 2025; rising from $8.8 billion last year, driven by deepfakes and synthetic IDs generated by AI, says a study by Juniper Research.
Remote physical goods fraud can involve both fraudulent sales of fake goods, as well as scammers creating fake accounts with fake IDs to fool merchants into sending goods that are never paid for.
An extract from the new report, Global Merchant Fraud Prevention Market 2024-2029, is now available as a free download.
The report warns that a comprehensive portfolio of fraud prevention tools is needed to minimise these losses. It predicts that behaviour-linked verification solutions will be key to diminishing the effectiveness of fraud strategies. Given consumers typically make purchases from a limited number of frequently used locations, geolocation verification has been identified as a highly valuable tool in fighting fraud.
Report author Thomas Wilson adds: “Ecommerce merchants must couple automated AI defence systems with human-piloted checks. This will combat sophisticated fraud tactics, such as synthetic returns labels and accurately weighted packages, that have enabled fraudsters to receive eCommerce goods for free.”
What must fraud prevention vendors do
The research also found that combining continuous checks, such as behavioural analytics with step-up verification via biometrics, can recognise fraud patterns that humans often miss, and must be deployed to help identify patterns in real-time. Therefore, vendors must develop solutions that focus on fighting tactics that deceive prevention tools at key points in the customer journey, most prominently, the point of payment.
