BY Fraser Tennant
E-commerce losses to online payment fraud are growing and mutating, financially impacting businesses across the globe, according to a new study by Ravelin.
The study, ‘Global Fraud Trends: Fraud & Payments Survey 2023’, which surveyed 1900 global fraud professionals, reveals that over the past 12 months businesses have seen a huge leap in online payment fraud, account takeover, promotion abuse, refund abuse, and customer and friendly fraud.
As a consequence, businesses are spending more on expanding fraud teams in a bid to mitigate losses. Globally, three-quarters of all online businesses state that their fraud budgets will grow in 2023. In the UK, 62 percent of businesses will be spending more on managing fraud, with France spending 70 percent, Germany 74 percent, the US 69 percent and Canada 84 percent.
Despite this increase in spending, the study found that the funding and expansion of fraud items is only part of the solution, and new approaches are urgently needed to fight fraud and minimise losses.
“Over the years, businesses have built up fraud investigation teams which they are justifiably proud of,” said Martin Sweeney, chief executive of Ravelin. “But fraud continues to grow and mutate and simply throwing more people and money at the problem will not make it go away. Losses will continue to grow.”
When it comes to tools for tackling fraud, the study reveals that most businesses opt for in-house solutions, with machine learning and two-factor authentication two of the tools increasingly being adopted by e-commerce businesses to help with the issue. However, in-house solutions are expensive to maintain and quickly become unsustainable as a business grows, according to Ravelin.
The study also found that there is no singular ‘one and done’ fraud strategy that is most effective. Different solutions are effective at fighting different frauds, and having a robust tool stack allows teams to consider the complex nature of fraud.
“Businesses need to get on the front foot managing fraud: using automation to nip fraudulent transactions in the bud,” concluded Mr Sweeney. “Better automation helps teams scale and frees up fraud investigators from mundane tasks enabling them to focus on informing product development, identifying other sources of profit erosion, and other more important strategic tasks that drive growth.”