Signifyd launches State of Fraud 2023 Report

As ecommerce fraud becomes more sophisticated and automated, retailers must regroup and deploy new forces and boosted budgets to fight against organised criminal rings through innovation. In the report, Signifyd signals the constant evolution of fraudsters and their techniques, claiming they now turn to artificial intelligence (AI) in the same way merchants and their partners have previously chosen AI to protect their revenue, targeting other points along the buying journey.

The real cost of fraud

According to data from the company’s recent findings, the real cost of fraud is more than double the initial transaction, so that for every fraudulent order of USD 100, merchants will most likely pay up to USD 207 in tangible losses, including the wholesale cost, shipping costs, chargeback fees, and fighting abusive claims. And, when retailers become too conservative, they end up declining good orders that were first flagged as problematic.

Fraud attacks are a moving target among verticals, which means that not all verticals are affected the same way and at the same time. Home goods and décor are mainly affected by fraud during their peak summer season (June-August), while fashion, apparel, and luggage see spikes in fraudulent activities during the bi-annual holiday seasons (summer and winter).

Bot attacks on the rise

Bots are being used by sophisticated fraud operations to monitor and automate purchases from merchants’ websites. At the same time, they have for long the key in fraud rings’ account takeover efforts, with automated card stuffing leading the way. 

Thus, one of the most important things merchants need to understand about fraud in 2023 is the true identity and intent behind every transaction, whether it’s flagged as problematic or passes manual and machine-learning verification processes during all stages of the shopping process, from account opening to checkout. 

With account takeover on the rise and fraudsters deploying high-technology bot attacks to steal users’ credentials and engage in card stuffing activities, testing the limits of both platforms and end-users, merchants must find new ways to protect their goods and the identity of their customers.