Merchants experienced more fraud in 2021 than 2020, with new types of fraud affecting 62% of merchants, finds fraud detection and payment acceptance specialist Ravelin.
Online payment fraud continues to be the biggest threat with 20% more businesses noticing an increase over the last year. This is the most expensive risk with global ecommerce losses to online payment fraud hitting $20 billion in 2021, a growth of over 14% YoY.
Policy abuse was also rife amid the pandemic. Refund abuse rose for 60% of merchants, up from 51% in 2020. In fact, almost a quarter of merchants reported refund abuse has grown significantly in a year and more digital goods and marketplace merchants saw refund abuse rise than other industries – causing concern for profits.
Promo abuse also saw a jump with 55% of merchants seeing an increase in 2021 from 49% in 2020. Again, digital goods merchants were worst hit – with a quarter of the industry seeing this rise significantly. While generous marketing schemes to beat the competition can help brands stand out, more promos also make for a greater opportunity to take advantage. It’s therefore no surprise that merchants are starting to recognise that policy abuse is an important threat and consider it as big a risk as friendly fraud.
In fact, friendly fraud is also on the rise for 46% of merchants, up from 40% in 2020, with digital goods and marketplace merchants the most affected. The same merchants are also the most at risk from account takeover. Digital goods were victim to the most attacks of all industries with an average of 4 high-level incidents per month. Both business types are easy targets for hackers, as digital goods can be easily resold without operational effort like organising delivery.
These findings are from Ravelin’s latest report, ‘Online merchant perspectives, fraud & payments survey 2022’, which draws on research from more than 1,700 international ecommerce merchant fraud and payment professionals.
Martin Sweeney, CEO at Ravelin, explains: “2021 was another turbulent year for ecommerce. Online e-commerce merchants are unfortunately a hot target for fraudsters — both on the buyer side and on the supplier side. Despite the tentative return of in-person buying, ecommerce continued to boom, and it became clear that the digital shift isn’t going anywhere.
“But with rising digital sales came increasing fraud attacks. It’s imperative that businesses invest in fraud teams and budgets in 2022, to create an ecosystem that comprises of fraud detection technology data and human insight to combat new types of fraud attacks fast.”