Online fraud attacks have become more sophisticated, more costly and more democraticA new report from Signifyd reveals as ecommerce fraud becomes more sophisticated and automated, retailers find themselves fighting against organized criminal rings as well as the consumer next door. Access the full report here.
January 17, 2023 09:00 AM Eastern Standard Time–SAN JOSE, Calif.–(BUSINESS WIRE)–Criminal ecommerce fraud rings are in the midst of a digital transformation just as the online shopper next door is becoming more brazen in breaking the rules and even the law to score free products from retailers, according to a research report published today by commerce protection provider Signifyd.
Signifyd’s “State of Fraud 2023,” tells the story of underworld operations that rely more than ever on bot attacks and automated social engineering. It also explores the unprecedented case of a Southeast Asian fraud factory that operates like a Fortune 500 company.
Among the key findings in the in-depth report:
- 2022 saw an unprecedented fraud attack unleashed on U.S. retailers by a shadowy Southeast Asian fraud ring. The ring made off with an estimated $600 million in high-end electronics and other goods nationwide in a wide-ranging and persistent November attack against retail enterprises. Its attacks targeted an estimated $3.3 billion in goods nationwide.
- Bot attacks on ecommerce sites increased by 71% in 2022, Signifyd data shows.
- The volume of fraudulent orders placed on Signifyd’s Commerce Network of thousands of merchants increased by 34% last year.
- Fraud rings have added automated social engineering to account takeover attacks. Their software programs automatically trigger email and SMS requests for account passwords and other credentials associated with breached accounts.
“In a time when we’re seeing professional fraud rings increase both their sophistication and automation, we believe it’s important to provide the market with a look at how the face of fraud is changing,” said Ping Li, Signifyd’s vice president of risk and chargeback operations. “As importantly, The State of Fraud provides actionable steps that retailers can take to protect themselves from the significant and escalating threat.”
The State of Fraud explores three trends that will define fraud and abuse in 2023:
- The acceleration of fraud innovation
- The growth of consumer abuse
- The shift of risk intelligence teams from defense to revenue optimization
The conditions are right for all three trends to accelerate in the coming year. Technology, including artificial intelligence, continues to improve while becoming less expensive fueling fraud innovation. Inflation and economic insecurity provide extra motivation for consumers who have been tempted to take advantage of a system that gives customers the benefit of the doubt when they report a missing package or the delivery of damaged goods. And retailers managing inflationary pressures while margins are being squeezed by increasing costs for customer acquisition and fulfillment, can’t ignore the revenue-optimization levers available to them.
The State of Fraud explores the conditions leading to rapid changes in fraud and risk and breaks down the true cost of fraud and the damaging ramifications both of fraud and of seeking to avoid it through obsolete approaches.
Signifyd provides an end-to-end Commerce Protection Platform that leverages its Commerce Network to maximize conversion, automate customer experience and eliminate fraud and consumer abuse risk for retailers. Its solutions provide the transparency and control that brands need to succeed in the rapidly changing world of commerce. Signifyd, which is the leading provider of payment security and fraud prevention for the Top 1000 Retailers for 2023, is headquartered in San Jose, CA, with locations in Denver, New York, Mexico City, São Paulo, London and Belfast.