Adyen and the Centre for Economic Business and Research reported that the UK retail industry suffered a loss of GBP 11.3 billion due to fraud in 2023. On average, individual enterprises experienced losses amounting to GBP 1.4 million as a result of fraudulent attacks.
Certain retail sectors are more heavily impacted by fraud. For example, luxury fashion retailers lost GBP 2.8 million and clothing and accessory businesses lost GBP 2.6 million. On the other hand, health and beauty brands lost GBP 1.1 million each.
Overall, a third of UK businesses (35%) fell victim to fraudulent activity, cyber-attacks, or data leaks over 2023. This represents an increase of 37% compared to 2022’s numbers.
The research found that those businesses who predicted to grow their revenues by 50 – 100% or more in 2024 also lost the highest amount to fraudulent attacks over the past 12 months (GBP 3.8 billion). Adyen warns that fast growth must be met with the right technologies in place to protect the business and customers.
Shopper wallets also experience fraud losses. Around 33% of UK consumers became a victim of payments fraud in 2023. This compares to 23% falling victim in 2022. Payment fraud is defined as a fraudster stealing someone’s credit or debit card number, or checking account data, and using that payment information to make an unauthorised purchase.
Of those consumers who fell victim to payments fraud in 2023, GBP 311.09 was the average amount lost per person in the UK. This figure rises by 16% since Adyen last conducted the survey in 2023.
However, despite the significant increase in fraudulent activity, only two-thirds of businesses (63%) said that they have effective fraud prevention systems in place. This represents an increase of 10% points since last year (53%).
Due to the risk of fraud, consumer behaviour has changed while shopping, both in-store and online. A quarter (26%) of consumers now feel more unsafe when shopping today compared to 10 years ago. This rise is due to the increased risk of payment fraud.
As a result, 16% of consumers actively choose to shop at stores which have higher security measures. When shopping online, 23% of consumers like it when retailers ask them to verify their identity in at least two different ways before making a purchase. This is despite the perceived inconvenience that this can cause.
Businesses are proactively addressing the increasing threat of fraud to safeguard themselves and their customers. Nearly half (47%) are contemplating switching to payment providers offering enhanced fraud protection. Additionally, 46% are exploring compliance with Payment Services Directive 3, which imposes stricter regulations to protect consumers' rights and personal data in the finance sector.
Officials from Adyen said fraud is a pervasive challenge for retailers. These findings demonstrate how it can significantly impact profits. Criminals are deploying more sophisticated methods when they attack businesses. This includes the application of AI. It’s therefore critical to invest in the right defence mechanisms to protect the company and customers.
Adyen’s team added that there’s no single solution to fraud defence. A strategy will need to be tailored based on the business model and platforms used to make sales. With technology in place, such as machine learning tools, retailers should be able to recognise genuine customers and spot fraudulent activity across their sales channels.
For more information about Adyen, please check out the company profile in The Paypers Company Database.
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