A new study by Juniper Research, a prominent authority on fintech and payment markets, has revealed alarming projections regarding eCommerce fraud, predicting a surge from $44.3 billion in 2024 to an astonishing $107 billion by 2029. This represents a staggering growth of 141 per cent, driven largely by the increasing use of artificial intelligence (AI) by fraudsters, enabling them to conduct more sophisticated and large-scale attacks across the eCommerce landscape.
The report underscores the profound threat that AI poses to online merchants, particularly through the use of deepfakes, which can effectively bypass traditional verification systems. Deepfake technology allows fraudsters to create highly realistic fake identities and messages, making it difficult for merchants to distinguish between genuine customers and malicious actors. This growing trend is compounded by the rise of “friendly fraud,” where customers themselves commit fraud, such as refund scams, further jeopardising the profitability of eCommerce businesses.
According to Thomas Wilson, the report’s author, the integration of AI into fraud detection is critical for eCommerce merchants. “Merchants must seek to integrate fraud prevention systems that offer AI capabilities to quickly identify emerging tactics,” he stated. This is particularly essential in developed markets, where larger merchants face heightened risks, including the testing of stolen credit cards.
As eCommerce continues to expand, particularly following the COVID-19 pandemic, online marketplaces have become prime targets for fraudsters. The rapid growth of online retail has created ample opportunities for criminals to exploit weaknesses in merchant systems, with sensitive customer information becoming an increasingly attractive target. Juniper Research emphasises that implementing effective fraud detection and prevention measures is crucial for merchants across various industries, as these strategies can help mitigate revenue losses from chargebacks and order reprocessing.
The report also highlights that fraudsters are constantly evolving their tactics, necessitating that merchants adapt their anti-fraud measures accordingly. “For merchants and businesses, fraud detection and prevention refer to the ability to monitor all transactions and payments effectively and safely, identify any suspicious activity quickly, and take appropriate action,” the report states.
In response to the escalating threat, merchants globally are increasingly adopting AI-driven fraud detection systems to recognise emerging fraud patterns and respond in real time. Additionally, biometric identification methods, such as liveness detection at checkout, are being implemented to enhance transaction security and prevent fraudsters from leveraging deepfake technology to impersonate legitimate customers.
In Nigeria, industry experts have pointed out that fraud is a significant barrier to eCommerce growth in the country. Many consumers express hesitance toward online purchases due to fears surrounding payment security, leading to a preference for options like pay-on-delivery. While customers are increasingly concerned about the safety of their payment information, merchants are grappling with challenges such as identity theft, chargeback fraud, and man-in-the-middle attacks, further complicating the eCommerce landscape.
The findings of this report serve as a critical wake-up call for merchants worldwide, underscoring the urgent need for enhanced security measures and greater vigilance in the face of evolving fraud tactics powered by AI.
