As our lives become more and more integrated within the digital realm, cyber gangs behind economic crimes have been quick to capitalize on this shift by tailoring scams to fit our changing lifestyles.
These cyber criminals have also adapted to the continuously rising trend of online shopping and remote working by impersonating parcel delivery companies, e-commerce platforms or broadband providers.
In parallel, criminals are recruiting “money mules” to launder stolen funds by posting fake adverts on job websites and social media, targeting those looking for work or to earn easy money during the pandemic, reported UK Finance.
“Let’s be clear, these fraudsters are not cheeky chancers, they are organized, ruthless criminals using sophisticated techniques to trick people out of their personal or financial information,” wrote Katy Worobec, Managing Director of the Economic Crime unit of UK Finance.
Worobec’s statement is further reinforced by a new study from Juniper Research which found that the value of losses due to eCommerce payment fraud will rise this year, from $17.5 billion in 2020 to over $20 billion by 2021; a growth of 18 percent over a single year.
The research found that fraudsters have targeted consumers as they have increased their eCommerce use; exposing insecure fraud mitigation processes from merchants who are unfamiliar and unprepared for the continuing fraud challenges in this market.
“Merchants need to do more to implement fraud prevention strategies across all of their eCommerce channels, or they will continue to experience large losses. The use of artificial intelligence (AI) will enable behavioral biometrics in this area, which will increase security across all potential fraud channels,” the report highlighted.
Increased security not friction
The research, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025, found that while merchants will be keen to reduce fraud rates from their current levels, they will be hesitant to introduce extra friction into the checkout process.
The report identified that clear messaging around security checks and automated behavioral analytics leveraging AI are key capabilities in preserving the user experience.
“While the need for security is greater than ever, the competitive eCommerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates,” Research co-author Susan Morrow explained.
China tops eCommerce payment fraud charts
According to its findings, the research also unveiled that China will be the largest single eCommerce payment fraud market in the world; accounting for over 40 percent of eCommerce fraud losses globally in 2025, at over $12 billion.
Juniper Research identified China as a massive eCommerce market and a relative lack of fraud detection and prevention platform deployment as the key drivers behind this. “Merchants operating in China should invest in fraud detection and prevention now, or they will increasingly face damage to their already slim operating margins,” authors of the report recommended.