57 Crucial eCommerce Fraud Statistics for 2024: Types, Cost & Protection Data

Even before the COVID-19 pandemic started, retail ecommerce revenue worldwide has been consistently growing since 2014. The pandemic just pushed the adoption of ecommerce software at a much faster rate. With consumers shifting their purchasing activities online, many businesses are now also actively investing in digital innovations. For example, 59% are investing in mobile apps, 32% in mobile wallets and 28% are investing in voice-based products (Javelin Strategy & Research, 2020).

However, more transactions online have also led to more fraudsters taking advantage of the situation. In this article, we will take a look at some of the most recent data on ecommerce fraud statistics. We’ll find out just how huge the problem of fraud is in the online world and learn about some of the most prevalent ways fraudsters are trying to commit such crimes. We will also provide statistics on ecommerce fraud in the time of COVID-19.

General eCommerce Fraud Statistics

With 59.5% of the world population having access to the internet and with more consumers driven by convenience shopping, it’s not surprising to learn that global retail ecommerce sales are projected to reach $4.9 trillion by 2021. However, we also see that global payment fraud is on the rise and will cost merchants $40.62 billion in losses by 2027.

Moreover, an ecommerce fraud increase has been observed by both businesses and consumers, with 20% of fraud victims reporting that the incident took place within the last 12 months.

• Global payments fraud has tripled, rising from $9.84 billion in 2011 to $32.39 billion in 2020. It is projected to cost $40.62 billion in 2027—25% higher than in 2020 (Merchant Savvy, 2020).
• The post-COVID-19 global fraud detection and prevention (FDP) market size is expected to grow from $20.9 billion in 2020 to $38.2 billion by 2025 (Markets and Markets, 2020).
• Ecommerce retailers deal with an average of 206,000 web attacks per month (Signal Sciences, 2019).
• Successful monthly fraud attempts increased by 43% to 48% for mid-to-large retailers and 27% for smaller retailers (LexisNexis, 2020).
• 47% of companies surveyed said they had experienced fraud in the past 2 years (Merchant Savvy, 2020).
• Daily attack volumes on retail websites spike to more than 75,000 on day 15 and day 30 of every month. An obvious correlation is that many organizations issue paychecks on those days, leading to increased online shopping volume (Signal Sciences, 2019).
• Companies will spend about $9.6 billion yearly on fraud detection by 2023. This is driven by financial institutions and payment service providers, not merchants (Morrow and Maynard, 2020).
• When it comes to fraud, younger people age 20-29 years old reported more cases (33%) than older people age 70-79 (13%) (FTC, 2020).
• 20% of the victims said that the fraudulent transactions happened in the past 12 months (Marqeta, 2020).
• 54% of consumers said they encountered fraudulent or suspicious actions on the Internet. Other forms of contact methods included mobile spam calls (18%), door-to-door sales (13%), postal mail (12%), or stores (5%) (Chuprina, 2021).
• 21% of consumers are afraid their credit card data will be stolen and 19% believe their confidential data may be misused (Chuprina, 2021).

Frequency, location, and fraud victim profile

Where do these fraudulent transactions happen? It turns out that the US is on the top when it comes to the number of consumers who experienced fraud. This is not surprising when you consider that it also suffered the most high-profile cyber-attacks between 2006 and 2020.

Among the victims, younger people encounter more cases than older people but it’s the older victims who lose more in terms of the dollar amount of the reported cases. The prevalence of fraud cases is so alarming that more consumers are actually worried about being a victim of identity theft and financial fraud than getting murdered.

• The US is the most fraud-prone country with 34% of consumers saying they were most likely to have been victims of fraud. It is followed by the UK (33%), Canada (29%), Germany (27%), and Austria (21%) (Paysafecard, 2018).
• Another survey also showed that more US consumers (46%) were hit by fraudulent transactions than consumers in the UK (36%) (Marqeta, 2020).
• 42% of respondents in the US and UK said they were victims of fraudsters (Marqeta, 2020).
• US retailers experienced a 9% year-over-year increase in the average volume of monthly fraud attacks (LexisNexis, 2020).
• More Americans worry about identity theft than murder. 72% worry about having their personal or financial information stolen, while 67% worry about being a victim of identity theft compared to 20% who worry about getting murdered (Anton P., 2020).

Types of eCommerce Scams Statistics

With the increase of fraud attacks and data breaches, it makes sense for online retailers to learn more about what types of ecommerce scams are being perpetrated by fraudsters. Doing so will not only increase their understanding of how these attacks actually take place but also help them plan their fraud prevention strategies.

Account takeover (ATO) is a well-known identity theft attack where hackers try to illegally access a person’s bank account, an ecommerce site, and other types of accounts using stolen credentials. But a rising trend among fraudsters is new accounts fraud (NAF), where cybercriminals create totally new accounts rather than hijacking existing ones. In a fraud study, it was discovered that almost half (48%) of cases involved new accounts less than 24 hours old.

Merchants also need to be aware of a type of fraud that can cause them a huge financial blow—chargebacks. Considering that at least 30% of items purchased through online stores are returned, it’s not hard to imagine how chargebacks can account for between 40% and 80% of all fraud losses.

• Among the 3.2 million marketplace reports received by the Federal Trade Commission in 2019, fraud made up 53.1% (1,697,934) of consumer complaints. Identity theft was second with 20.3% (650,572), while other cases made up 27.9% (892,243) (FTC, 2020).
• Credit card fraud was the most common type of identity theft (20.33%), followed by imposter scams (20.23%), and telephone and mobile services (5.83%) (FTC, 2020).
• Friendly fraud chargebacks—a type of credit card fraud—can account for between 40% and 80% of all fraud losses (Columbus, 2020).
• 40% of customers who file a chargeback will do it again within two months (Chargebacks911, n.d.).
• The top five attacks on ecommerce sites are account takeover (ATO) (29.8%), bot imposter (24.1%), SQL injection (SQLI) (8.2%), cross-site scripting (XSS) (8.7%), backdoor file (6.4%), other (22.8%) (Signal Sciences, 2019).
• When it comes to payments fraud, new accounts fraud (NAF) is a rapidly increasing trend. NAF increased by 27.8% worldwide YTD in 2019 (Shuftipro, n.d.)

Cost of eCommerce Fraud Statistics

As successful fraud attempts rise, so do the number of financial losses incurred by both businesses and individuals. In the US alone, the amount lost to fraud in 2019 was over a billion dollars. The per dollar cost of ecommerce fraud on retailers has also continuously increased, from $2.40 in 2016 to $3.13 in 2019 and $3.36 in 2020.

• Fraud costs the global economy $5.127 trillion each year (Crowe, 2019).
• Based on the Federal Trade Commission’s Consumer Sentinel Report, the total amount lost to fraud in 2019 was $1,901,064,357 (FTC, 2020).
• Fraud now costs US retailers $3.36 for every dollar lost to fraud, compared to $3.13 in 2019 and $2.40 in 2016 (LexisNexis, 2020).
• US retailers faced a 7.3% year-over-year increase in fraud costs (LexisNexis, 2020).
• It’s estimated that online fraudsters will take more than $12 billion from businesses in 2021 (Signal Sciences, 2019).

Fraud losses based on payment contact, method, and age

Different payment methods incur different amounts of financial losses. Based on the numbers, most scammers seem to inflict the biggest financial damage through wire transfer transactions, totaling $439 million.

On the other hand, scamming through phone contacts is apparently the easiest way for fraudsters to rake in huge amounts of money. Scams made through phone contacts posted the biggest amount lost at $493 million.

Finally, the amount lost also varies among different age groups. Older people ages 80 and above incurred the biggest median loss to fraud—$1,600.

• Among the different payment methods, fraudulent wire transfer transactions posted the biggest dollar amount lost ($439 million), followed by credit card fraud ($135 million), and gift/reload cards ($103 million) (FTC, 2020).
• Among the different contact methods where fraud takes place, phone contacts posted the biggest amount lost ($493 million). Websites and e-mail followed with $325 million and $226 million, respectively (FTC, 2020).
• Retailers are expected to lose about $130 billion in revenue on fraudulent card-not-present (CNP) transactions between 2019 and 2023 (Morrow and Maynard, 2020).
• Losses to fraud incurred by payment card issuers worldwide reached $19.21 billion (The Nilson Report, 2019). 
• The median loss to fraud of older people was much higher than younger people. It costs $448 for those aged 20-29, $800 for those in the 70-79 age bracket, and $1600 for those ages 80 and over (FTC, 2020).
• Among card fraud victims in the US and UK, 66% reported that they had more than $100 charged to their card, while in 20% of cases, it was more than $500 (Marqeta, 2020).

eCommerce Fraud Protection Data Statistics

The staggering amount of financial losses due to fraud makes you think how important it is to have security measures in place to fight it. Sadly, only 34% of businesses are investing in fraud prevention and mitigation. This is quite a shocking revelation, especially when statistics show that companies with fraud prevention measures in place were able to lower their fraud attack response expenses by 42% and their remedy expenses by 17% compared to companies without such programs in place.

• 58% of mid-to-large retailers selling digital goods say that differentiating synthetic identities is a top verification challenge (LexisNexis, 2020).
• 42% of businesses say digital fraud slows their innovation and expansion into new digital channels and services, but only 34% of retailers are investing in fraud prevention and mitigation (Javelin Strategy & Research, 2020).
• Among the reported fraud cases, 39% were committed by external perpetrators, 38% by internal perpetrators, and 20% by internal and external perpetrators colluding (Merchant Savvy, 2020).
• The most adopted fraud detection tools include card verification number (CVN) (88%), address verification service (AVS) (82%), postal address validation services (60%), geographic indicators/maps (54%), email verification (54%), phone number verification/reverse lookup (49%) (Confirmit, 2017).
• Companies that implemented fraud prevention programs were able to reduce their fraud attack response expenses by 42%, their remedy expenses by 17% compared to companies without such programs in place (Merchant Savvy, 2020).

Fraud protection for consumers

• 87% of consumers admitted they would agree for transactions to take longer to complete if extra steps for authentication meant their information was better protected (European Payments Council, 2021).
• In a survey composed of US and UK consumers, 80% said they’d bought something online within the last three months, but 21% said they worried about inputting their card details every time they made a transaction. Another 31% said they worry every time they buy something online (Marqeta, 2020).
• Meanwhile, 59% of respondents said they did not accept fraud as part of the digital economy (Marqeta, 2020).
• Consumers are divided on who to blame for fraud: 57% of UK respondents said it was their responsibility—not the bank’s—to protect themselves against fraud, while 51% of US consumers said the same (Marqeta, 2020).
• 52% of survey respondents said they could be better at protecting their card information (Marqeta, 2020).
• On the other hand, 70% said that their banks should be able to more accurately predict fraud (Marqeta, 2020).
• Only 31% agreed that the risk of fraud was a fair trade-off for the convenience of new digital methods of payment (Marqeta, 2020).
• 54% of all respondents said the risk of fraud made them less likely to try out newer technology like a mobile wallet (Marqeta, 2020).
• Based on online shopping fraud statistics, consumers are willing to change their shopping habits in order to avoid fraud. Seventy-five percent would agree to enter their payment details manually over having it stored by a merchant. Another 77% said they would choose to shop at a merchant that didn’t store their card information (Marqeta, 2020).

Impact of COVID-19 on eCommerce Fraud Statistics

As the whole world has seen, digital transactions spiked during the COVID-19 outbreak. Experts predict that this transition of many business functions from offline to online will continue even after the pandemic. With the increase in online transactions also came the surge of fraud attacks during the health crisis. Account takeover saw the highest fraud surge followed by phishing websites that contained coronavirus-related keywords.

Moreover, since contactless payment methods also increased during lockdowns, there was also a spike in CNP fraud cases. CNP is projected to rise 16.4% in 2021.

Who bears the brunt of the COVID-19 related fraud spikes? Survey shows that it’s mid-to-large general merchandise retailers who suffered the most. They faced 70% more fraud attempts per m0nth when lockdowns and stay-at-home orders were implemented in 2020.

• Ecommerce sales continued to increase amidst the pandemic in the US (13%), the UK (17%), and Asia Pacific (43%). This was driven by sub-sectors such as digital downloads, apparel, DIY, gaming, and alcohol (Germain, 2020).
• In the US alone, there has been a 110% year-over-year increase in pure ecommerce orders at the beginning of 2020 (Columbus, 2020).
• The average number of successful monthly fraud attempts increased 43% to 48% for mid-to-large retailers and 27% for smaller retailers (LexisNexis, 2020).
• In a tally showing COVID-related fraud spikes, account take over (ATO) attacks had the highest surge (282%), followed by phishing websites (250%), fraud attempt rate (100%), and fraud loss volume (87%) (European Payments Council, 2021).
• Meanwhile, Google reported a 350% surge in Phishing websites with coronavirus-related keywords in March 2020 (Damiani, 2020).
• The increased use of online payments and contactless credit cards also led to more CNP fraud, which is projected to rise by 16.4% in 2021 (Lourenco, 2021).
• According to the FTC, Americans have already lost $145 million to fraud related to the coronavirus (Morales and Hauser, 2021).
• Mid-to-large general merchandise retailers had on average 70% more fraud attempts per month compared to surveys prior to shutdowns in March 2020 (LexisNexis, 2020).
• Fraudsters are targeting more expensive items such as electronics and branded items. Fraud transactions by value were 4.4% higher in July 2020 (Germain, 2020).

How can social engineering impact ecommerce fraud?

Social engineering attacks are increasingly used by cybercriminals to manipulate individuals into divulging confidential information, often serving as an entry point for ecommerce fraud. Unlike traditional cyber attacks that exploit system vulnerabilities, social engineering targets human psychology, making it challenging for both consumers and businesses to detect. Here’s how social engineering impacts ecommerce fraud and why it’s a significant concern:

• Phishing Scams: Fraudsters often use phishing emails, texts, or social media messages that appear to be from legitimate ecommerce sites, prompting users to click on malicious links or enter sensitive information like login credentials. Once accessed, these credentials can be used to commit account takeover (ATO) fraud.
• Vishing and Smishing: Voice phishing (vishing) and SMS phishing (smishing) scams target users via phone calls or text messages. Attackers pretend to represent banks or ecommerce platforms, convincing users to provide personal or payment information. This data can be exploited for unauthorized purchases or identity theft.
• Fake Customer Support: Fraudsters may pose as customer support agents to gain access to consumer accounts. By asking for account details under the guise of assisting with an order, they can quickly gain access to sensitive information.
• Malware and Fake Apps: Criminals use malicious apps or fake websites that mimic reputable ecommerce brands. Once installed or visited, these can capture data such as credit card numbers, usernames, and passwords, which are then used for fraudulent transactions.
• Pretexting and Impersonation: Attackers create elaborate stories (pretexts) to impersonate trusted entities, like delivery services or bank representatives. This approach exploits users’ trust, convincing them to share information they would otherwise protect.
• Targeting Employees of Ecommerce Businesses: Social engineering isn’t limited to consumers; attackers may target employees of ecommerce companies to gain insider access to systems and customer data. By impersonating trusted figures or colleagues, attackers trick employees into granting access to restricted areas or sensitive information.

Protecting Your Business Against eCommerce Fraud

eCommerce fraud takes many forms. As we’ve seen in the statistics above, the pandemic has brought in more business for merchants online, but it has also attracted more fraudsters in the online retail world. Simply put, the more money and the bigger the market, the more scammers will also come and try to wreak havoc on the industry.

If you’re running an online store, it’s important to take these fraud statistics and threats seriously by having fraud prevention strategies for your store. It may seem like an arduous task, but based on the numbers we presented—especially on the financial costs of fraud on businesses—the ROI of implementing fraud prevention programs is worth the time and investment.

You should also keep abreast with the latest ecommerce trends such as better online payment systems. Whether you’re a business owner or a professional working in the ecommerce realm, reading up on these types of statistics and trends will always be useful in your fight against ecommerce fraud.

Key Insights

• Ecommerce Growth and Fraud: The consistent growth of retail ecommerce revenue since 2014 was significantly accelerated by the COVID-19 pandemic, which also led to a rise in fraud cases.
• Global Impact: Global retail ecommerce sales are projected to reach $4.9 trillion by 2021, while global payment fraud is expected to cost merchants $40.62 billion by 2027.
• Fraud Statistics:
  • Global payments fraud tripled from $9.84 billion in 2011 to $32.39 billion in 2020.
  • Monthly fraud attempts increased by 43% to 48% for mid-to-large retailers.
  • US retailers saw a 7.3% year-over-year increase in fraud costs.
• Types of Scams: Account Takeover (ATO) and New Accounts Fraud (NAF) are prominent scams. Chargebacks represent a significant financial burden, accounting for 40% to 80% of all fraud losses.
• Consumer Concerns: 21% of consumers worry about their credit card data being stolen, while 54% encountered fraudulent actions online.
• Fraud Protection: Only 34% of businesses invest in fraud prevention, although those that do report a 42% reduction in fraud response expenses.
• COVID-19 Impact: The pandemic caused a surge in digital transactions and related fraud, with account takeover and phishing websites seeing significant increases.

FAQ

1. What are the main types of ecommerce fraud? Account Takeover (ATO) and New Accounts Fraud (NAF) are major types of ecommerce fraud. ATO involves fraudsters using stolen credentials to access existing accounts, while NAF involves creating new accounts with fraudulent information. Chargebacks, a type of credit card fraud, also pose significant financial risks to businesses.
2. How has the COVID-19 pandemic affected ecommerce fraud? The pandemic accelerated the growth of ecommerce, which in turn led to a surge in fraud cases. Account takeover attacks increased by 282%, phishing websites by 250%, and the overall fraud attempt rate by 100%. The rise in online and contactless payments also contributed to a 16.4% increase in Card-Not-Present (CNP) fraud.
3. What are the projected financial losses due to ecommerce fraud? Global payment fraud is projected to cost merchants $40.62 billion by 2027. In the US alone, fraud costs have risen to $3.36 per dollar lost to fraud in 2020. Online fraudsters are expected to steal more than $12 billion from businesses in 2021.
4. Which consumer demographic is most affected by ecommerce fraud? Younger consumers aged 20-29 report more cases of fraud, but older individuals aged 70-79 and 80+ incur higher financial losses. The median loss for those aged 80 and above is $1,600 compared to $448 for those aged 20-29.
5. What steps can businesses take to protect against ecommerce fraud? Businesses should invest in fraud prevention measures such as card verification numbers (CVN), address verification services (AVS), and geographic indicators. Implementing these measures can reduce fraud attack response expenses by 42% and remedy expenses by 17%. Regularly updating security protocols and staying informed about the latest fraud trends are also crucial.

References:

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By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. From pitch deck to exit strategy, he is no stranger to project business hiccups and essentials. He has been involved in a few internet startups including a digital route planner for a triple A affiliate. His advice to vendors and users alike? "Think of benefits, not features."