A new report from Signifyd, a leading commerce protection provider, reveals an alarming rise in ecommerce fraud driven by Gen AI, human trafficking, and sophisticated global criminal rings. The "State of Fraud and Abuse 2024" report highlights the industrialization of online fraud and the growing overlap between ecommerce fraud and cybercrime.

1. Accelerating Fraud Tactics

• Fraudulent order attempts increased by 19% in the first half of 2024, signaling a shift in tactics by organized crime groups.
• Address manipulation was found in 13% of orders, a technique designed to bypass machine learning models.
• Reshipper fraud cases have surged 50%, indicating the growing use of intermediaries to move stolen goods out of the U.S.

2. Industrialization of First-Party Fraud

• Professional fraud rings are expanding into non-payment fraud, often referred to as first-party fraud and abuse.
• A new trend of fraud-as-a-service allows these groups to offer refund fraud to consumers for a cut of the profits.

3. Impact of Fraud on Retailers and Consumers

• Retailers face the challenge of mitigating fraud without rejecting legitimate orders, which can damage customer lifetime value.
• Consumers are urged to closely monitor their accounts to detect signs of fraud and ensure their data hasn’t been compromised.

Fraud Rings: Growing Complexity and Innovation

Fraud rings are evolving rapidly, with AI-powered deep fakes becoming a new tool in their arsenal. Criminal rings are even expanding into Southeast Asia, where human trafficking is fueling fraud compounds. One Vietnam-based fraud ring stole $940 million in merchandise over a few months, targeting $4.7 billion worth of goods.

According to Raj Ramanand, CEO of Signifyd, “Fraud protection leaders continue to innovate and add machine learning and data science resources to stay ahead of these attacks, ensuring that retailers can protect their customer experience and preserve long-term value.”

The State of Fraud and Abuse 2024 report underscores the growing threat posed by global fraud rings and the need for retailers and commerce protection professionals to adopt advanced fraud prevention systems. Retailers must strike a balance between guarding against fraud and maintaining a seamless customer experience.