By Milcah Tanimu
A recent study by Juniper Research predicts that global eCommerce fraud will rise sharply. Specifically, the amount will increase from $44.3 billion in 2024 to $107 billion by 2029. This marks a staggering growth of 141%.
This increase is largely attributed to the growing use of artificial intelligence (AI) by fraudsters. Consequently, AI enables more sophisticated and large-scale attacks within the eCommerce sector. Moreover, the report highlights how AI, particularly through deepfakes, poses a significant threat to online merchants. By defeating verification systems, it makes it easier for fraudsters to operate.
Additionally, “friendly fraud” is becoming more prevalent. This term refers to when customers themselves commit fraud, such as through refund scams. As a result, this trend further threatens the profitability of merchants.
AI-Enhanced Fraud Tactics
According to the report, AI technology helps fraudsters stay ahead of security measures. They can create credible messages and synthetic identities to execute complex attacks. Furthermore, the scalability of AI allows fraudsters to automate their schemes. This often overwhelms traditional fraud prevention systems.
“eCommerce merchants must integrate fraud prevention systems that offer AI capabilities,” stated Thomas Wilson, the report’s author. He emphasized that this integration is crucial in developed markets. In fact, larger merchants are at a higher risk, especially from testing stolen credit cards.
Online Marketplaces as Prime Targets
The report also warns that online marketplaces have become prime targets for fraudsters. This is especially true since eCommerce has grown rapidly during the COVID-19 pandemic. Consequently, the rise in online retail creates more opportunities for fraudsters to exploit weaknesses in merchant systems. Sensitive customer information remains an attractive target.
Juniper Research stresses the importance of strong fraud detection and prevention measures. These are critical for merchants to avoid unnecessary revenue loss from chargebacks and order reprocessing. “Anti-fraud measures must evolve as fraudsters change their tactics,” the report stated.
Merchants’ Response to Fraud Threats
In response to these growing threats, merchants worldwide are increasingly adopting AI-driven fraud detection systems. These systems help recognize emerging fraud patterns and allow for real-time responses. Furthermore, the report notes that biometric identification methods, such as liveness detection at checkout, are also being utilized. This helps secure transactions and prevents fraudsters from using deepfake technology.
Local Impact: Nigeria’s eCommerce Landscape
In Nigeria, industry experts say fraud remains a major obstacle to eCommerce growth. Many Nigerians hesitate to make online purchases due to concerns about fraud. Therefore, this has led to a preference for pay-on-delivery options. While customers worry about their payment details being compromised, merchants struggle with identity theft, chargeback fraud, and man-in-the-middle attacks.
