With the continual growth of e-commerce around the world, retail e-commerce sales are forecasted to witness an increase of about $3 trillion between 2021 and 2028. This global expansion, however, carries with it a stark warning from analysts at Juniper Research. It points to the escalating threat of online payment fraud, which will likely increase along with transactions.
It’s estimated that e-commerce payment fraud may lead to global merchant losses surpassing $362 billion from 2023 to 2028. 2028 alone might see the brunt of this, with a projected loss of over $91 billion.
Fraudsters and the Rising Tide of Fraud In the UK
Fraudsters are experts at exploiting the vulnerabilities, and will continue to do so successfully by adapting to global situations. For instance, the Ukraine-Russia conflict has been leveraged by fraudsters to trick UK residents into clicking links to a fake charity website under the pretence of donating money. The true intention behind these actions is to steal bank details and drain the victims’ bank accounts.
A quarterly fraud analysis carried out by the global information and insights provider, TransUnion, brought to light a concerning increase in suspected digital fraud attempts originating from the UK. Comparing Q2 2021 to Q2 2022, the rate of these attempts surged by 32 per cent, with financial services and insurance sectors being hit the hardest.
The Digital Acceleration and Rise of Identity Theft
The rapid digital progression amid the pandemic has caused a worrying spike in online fraud attempts, particularly within financial services. Opportunistic fraudsters have jumped on this trend, leading to a sharp surge in identity theft incidents globally. The US, in particular, has faced substantial economic setbacks from these crimes annually. Unfortunately, despite the escalating threat, consumer awareness remains notably deficient. This is partly due to inadequate news coverage and the targeted advertising strategies deployed by credit bureaus and identity theft service providers.
This state of affairs underlines the importance of educating consumers on fraud prevention. Knowledge is power; in this context, awareness of fraudulent techniques can be the first defence against these crimes. By being informed about common scam tactics, learning how to recognise potential fraud, and the necessary steps to protect personal information, consumers can better safeguard themselves against fraud. Furthermore, a well-informed consumer can assist in the wider fight against fraud. By reporting potential scams, aiding in their timely disruption and contributing to a safer digital landscape. This is why consumer education in fraud prevention should be a priority in our increasingly digitalised world.
The Crucial Role of Fraud Prevention Education
Cara Malone, the research author, provides an insightful analysis of the study. She correctly emphasises the pivotal role of data sharing in the combat against online fraud. Malone says data sharing isn’t just a value addition; it’s an integral component in fraud detection and prevention. She articulates how this becomes especially critical with the growing application of artificial intelligence (AI) in fraud prevention. AI’s ability to process and learn from diverse data sets allows it to unearth patterns in fraudulent activities, thereby enhancing detection accuracy and speed.
Malone points out that these AI-driven advantages are particularly beneficial in cases where fraudsters mount large-scale assaults. Essentially, AI, through the aid of mass data sharing, can anticipate and identify these scams. Thereby protecting numerous potential victims simultaneously. The real-time, proactive prevention capability of AI, combined with the power of shared data, could be the game-changer. Therefore, fostering a culture of proactive data sharing and collaboration among organisations, clients, and the fraud prevention services industry is vital.
The Emergence of BNPL-Related Fraud
The rise in e-commerce transactions and increasing interest rates globally have made Buy Now Pay Later (BNPL) services increasingly popular. However, this growth has inadvertently given birth to BNPL-related fraud. Fraudsters have been able to access existing BNPL accounts to carry out unauthorised purchases, or they use fabricated identity information to open new BNPL accounts.
Malone’s report further reveals that fraudsters will continue discovering and exploiting new methods to exploit BNPL’s growth. She proposes that AI could be utilised to carry out more comprehensive background checks to diminish the approval of fraudulent accounts.
