The convenience and accessibility provided by e-commerce marketplaces have revolutionized how consumers shop. From clothing and electronics to groceries and gifts, the digital marketplace offers a wide range of consumer products at our fingertips. According to Forbes, worldwide e-commerce sales are expected to grow from $6.3 billion in 2023 to $8.1 billion by 2026. Forbes also reports that 20.8% of retail purchases will occur online in 2023.
There’s no denying that consumers are quickly shifting from shopping malls to their devices to make their purchases. However, amidst this accelerated growth of the e-commerce sector lies a growing number of nefarious actors looking to exploit it by operation different types of eCommerce fraud.
As technology advances, so do the tactics of cybercriminals seeking to exploit vulnerabilities within online transactions. From phishing schemes to sophisticated account takeovers, e-commerce fraud constantly evolves to steal profits from legitimate online businesses. In addition to the success of the global e-commerce sector, Forbes also reports the downside: $41 billion was lost to e-commerce fraud in 2022, and a further $48 billion is expected to be lost to fraud by the end of 2023.
Tracking the Trends and types of eCommerce Fraud
Today, e-commerce scammers employ various tactics to exploit vulnerabilities. These include phishing emails, counterfeit products, fraudulent returns, account takeovers, and sophisticated bots. Cybercriminals are increasingly targeting mobile transactions as the world is shifting more and more from laptops and PCs to smartphones. They also use fake reviews and identity theft to deceive and defraud unsuspecting consumers and businesses. Some ongoing trends in e-commerce fraud include:
· Bots Powered by Artificial Intelligence (AI): Traditional bots have evolved into advanced automated tools capable of intricate attacks, such as inventory scalping and rapid transaction stuffing. Without robust bot protection, websites can be overwhelmed and exploited quickly.
· Heightened Focus on Smartphone Transactions: According to the Pew Research Center, 91% of Americans ages 18 to 49 make mobile purchases. Cybercriminals are exploiting this trend as the smaller screens make it easier to deceive users, and mobile apps can be vulnerable to malicious code.
· Phishing and Social Engineering: Despite brand awareness campaigns to inform consumers of potential threats, cybercriminals continue to deceive customers through phishing emails, text messages, and social media posts that lead to fake websites. Social engineering attacks manipulate human psychology to bypass security measures and drive fraudulent purchases.
Account Takeover and Synthetic Identity Fraud
Many losses incurred by e-commerce businesses come from fraudsters utilising phoney accounts on marketplaces such as Amazon or eBay to make fraudulent purchases. Account takeover fraud occurs when a malicious actor gains unauthorised access to a user’s online account. They often achieve this access through phishing emails, data breaches, or leveraging weak passwords. Once inside an account, they can make unauthorised purchases, steal sensitive information, and use the account as a launchpad for further illegal activities.
Account takeovers differ slightly from synthetic identity fraud. Here, nefarious actions create a fabricated identity using actual and fictitious information. Unlike traditional identity theft, where an individual’s personal information is stolen, synthetic identity fraud involves the creation of an entirely new identity that is not linked to any actual person.
Phony Returns and Exchanges
As covered in a previous GreyScout blog, e-commerce scammers will often exploit Amazon’s consumer-friendly return policies through various “Buy and Return” schemes. The most common form of this type of fraud is the “wardrobing scam”. Here, a cybercriminal will buy a product, use it, and return it to the seller. As the returned product cannot be sold as new, Amazon must dispose of the product, and the fraudster gets away with the money.
The Bottom Line
As e-commerce marketplaces continue to dominate consumer spending, they become an attractive target for online criminals. While Amazon, the largest e-commerce marketplace, offers brand protection programs, sellers must adopt a proactive stance in combating online scams that go beyond relying solely on these essential tools.
For brands operating on e-commerce marketplaces, leveraging comprehensive brand protection software with continuous detection, monitoring, and enforcement capabilities is crucial. By employing the right brand protection software, brands can swiftly identify fraudulent activity, combat buy and return schemes, address hijacked listings, and mitigate other potential threats. GreyScout’s online brand protection platform provides a seamless solution for monitoring online marketplaces.
