23+ eCommerce Fraud Statistics (2023)
The High Stakes of eCommerce Fraud
Key Statistics:
- eCommerce companies lose a staggering $48 billion annually to fraud.
- Every $100 in fraudulent orders results in $207 in losses.
- On average, eCommerce businesses employ 5 fraud detection tools.
eCommerce fraud is a multi-billion-dollar problem, causing severe financial losses to businesses. Fraudulent orders not only hurt profits but also lead to additional costs like shipping expenses and chargebacks. To combat this menace, eCommerce companies are investing heavily in fraud prevention tools.
The Evolving Landscape of eCommerce Fraud
Key Statistics:
- Global losses from eCommerce fraud increased by 16% in the past year.
- The eCommerce fraud detection and prevention market is estimated at $47.93 billion in 2023.
- eCommerce companies lost 2.9% of their global revenue to fraud last year.
The ever-evolving eCommerce landscape is giving rise to new forms of fraud, driven in part by the adoption of innovative payment methods like Buy Now Pay Later. As a result, the eCommerce fraud detection and prevention market is on a trajectory of rapid growth.
The Financial Toll of Fraud Management
Key Statistics:
- eCommerce merchants spend an average of 11% of their annual revenue on fraud management.
- Merchants in APAC countries spend 15% of revenue on fraud management.
- Small businesses and enterprise merchants allocate 12% of their revenue to fraud management.
Fraud management is a substantial financial burden for eCommerce companies. Different regions and company sizes allocate varying percentages of their revenue to combat fraud, with smaller businesses and enterprises facing higher costs.
The Cost of Fraudulent Orders
Key Statistics:
- Merchants lose $207 for every $100 in fraudulent orders.
ECommerce fraud goes beyond the immediate loss of revenue from fraudulent orders. It encompasses wholesale costs, shipping and fulfillment expenses, chargeback fees, and processing fees, significantly impacting a business's bottom line.
Types of eCommerce Fraud
Key Statistics:
- The average eCommerce merchant accepts 4.6 forms of payment.
- Phishing is the most common form of eCommerce fraud.
- First-party misuse (friendly fraud) affects 34% of global eCommerce merchants.
eCommerce fraud takes various forms, from payment fraud to phishing attacks and friendly fraud. Understanding these forms is essential for crafting effective prevention strategies.
The Rise of Account Takeovers
Key Statistics:
- 46% of US eCommerce merchants see payment fraud as the top risk.
- 21% of merchants consider account takeover the most significant risk.
Account takeovers pose a significant threat to eCommerce businesses, with a substantial percentage of merchants regarding it as the most critical fraud risk.
Strategies for eCommerce Fraud Prevention
Key Statistics:
- The average eCommerce company employs 5 fraud detection tools.
- 75% of eCommerce companies plan to increase their fraud prevention budgets.
- Two-factor authentication is considered the most effective fraud-fighting tool.
eCommerce companies use a variety of tools and strategies to prevent fraud, with the majority planning to allocate more resources to fraud prevention in the future. Two-factor authentication is widely regarded as one of the most effective measures.
The Consumer Perspective
Key Statistics:
- 25% of eCommerce shoppers request refunds while keeping the product.
- 45% of US shoppers have committed some form of return fraud or policy abuse.
- 43% of eCommerce consumers have fallen victim to payment fraud.
Consumers also play a role in eCommerce fraud, with a notable percentage engaging in return fraud and contributing to payment fraud occurrences.
The Road Ahead
As eCommerce continues to grow, so does the threat of fraud. While complete eradication of fraud may be elusive, leveraging technology to verify shopper identities and implementing measures to reduce fraudulent refunds and returns can help safeguard revenue for online retailers.
In conclusion, eCommerce companies must remain vigilant in their fight against fraud, adapting to the ever-changing landscape and investing in robust prevention tools and strategies to protect their businesses and customers alike.