New data shows that ecommerce fraud is costing online retailers US $11 million a year and a significant percentage of this is coming from the customers themselves. Alarmingly, as customer fraud becomes more mainstream, retailers are finding it harder and harder to keep up.
New research from ecommerce fraud prevention platform Ravelin, which surveyed 1,466 fraud and payments professionals from around the world for its Global Fraud Trends in Online Retail report, found that three in four retailers say fraud has risen over the past year.
Customer fraud has overtaken criminal fraud, with 32% saying their own shoppers pose the biggest threat. Refund abuse, false chargebacks and promo manipulation are among the common ways that customers are defrauding retailers, with the trend particularly acute among clothing, accessories, and beauty retailers.
Over half (52%) reported that their own customers were more likely to attempt fraud in the past year. Computer and electronics retailers are also struggling, with 47% claiming that they have seen increased customer fraud. For all other retailers, the figure falls to around one in four (28%).
Social media and cost-of-living to blame
Mairtin O’Riada, Ravelin co-founder & COO, says that the speed with which the threat environment is evolving is cause for alarm. “Retail fraud is evolving faster than many merchants can respond,” he said.
“Emboldened by social media and motivated by the cost-of-living crisis in many places, consumers are trying their hand at fraud. Practices that used to be used by professional cybercriminals have become entrenched in how many people shop today. This blurring of the lines between criminal and customer fraud makes it difficult for retailers to stay ahead.”
While retailers have worked hard to get close to their customers and ensure as smooth a customer journey as possible, O’Riada points out that this can have unintended negative consequences.
“If retailers are not careful, every new promotion, returns policy update, or convenience feature designed to improve the customer experience can open another door to abuse,” he warned.
Is AI the answer?
Many retailers are turning to AI-based tools to stay ahead, but adding additional layers of security can create friction for genuine customers that may result in lost sales.
Research from Ping Identity’s 2025 consumer survey, for example, shows that 61% of Consumers have abandoned an account or provider (including retailers) entirely due to not being able to remember their password or not being given the option to reset it.
Trust, too, is low, with only 17% of those surveyed by Ping Identity fully trusting retail organisations to manage their identity data.
With Christmas around the corner, Ravelin’s data highlights how retailers risk losing both revenue and loyal customers as they tighten defences against rising returns, promo and chargeback abuse.
However, as customer fraud becomes more mainstream, O’Riada believes that the solution lies with AI, used not just as a defensive tool but as a way of finetuning the customer journey.
“Retailers are caught in a balancing act, trying to protect margins without making it harder for honest customers to shop. What the situation calls for is not just stopping fraud, but first, but understanding it in all its new forms,” he added.
Originally published on InternetRetailing