New research from Ravelin reveals that failing to tackle online fraud increasingly damages the brand reputation and bottom line for thousands of businesses worldwide.
Almost two-thirds of all e-commerce brands (61%) have found themselves at the centre of highly damaging public media storms when fraud hits, according to Ravelin’s Global Fraud Trends 2024 Survey. Of those polled, 40% (41% in the UK) say their brand image has been affected by fraudulent activities. This varies by sector – 40% of retailers, 36% of those in travel, 45% in digital goods, and 38% in marketplaces.
Overall, Ravelin found that fraud has increased for 74.8% of companies worldwide, with some regions suffering more than others. The UK has seen the biggest increase, at 84%.
The results of such negative publicity can be devastating for e-commerce brands.
Fraud also negatively impacts stock prices for 20% of larger companies, and across the board, responders said fraud affected growth the most, at 51.8%. One in four say they lose more than $15m (£12m) to fraud yearly, and 51.8% say fraud stifles company growth, leading to broader knock-on impacts. Customer loyalty also takes a hit for 37% of companies, further impacting reputation.
Interestingly, 31% (39% in the UK) of respondents polled by Ravelin cited worries about public image as an obstacle to fighting fraud more efficiently. The key concern was adding friction to the customer journey, which impacts loyalty and reputation.
“In a highly connected world where reputations can be globally trashed with just a few keystrokes, brands must do more to mitigate against fraud,” Ravelin CEO Martin Sweeney said. “A company’s reputation means everything and must be protected as if it’s a matter of life and death – from a business perspective, that’s exactly what it is.”
“Machine learning is recognized as crucial to fighting fraud without adding friction and enabling brands to spot issues before they escalate and impact reputation.”
Automation in the form of machine learning is widely seen (66.2%) as the most useful implementation of artificial intelligence for fraud prevention, ahead of large language models (46%), generative adversarial networks (GANs) (38.7%) and big data analytics (36.8%).
Across the board, two-factor authentication (2FA) – which includes technologies such as 3D Secure and biometric verification – is the most popular fraud-thwarting tool (54.1%).
In March 2024, Ravelin carried out an online survey of 1457 fraud and payments professionals from around the world, with a focus on the UK, USA, Canada, France, Germany, Italy, Spain, Australia, Brazil, and Mexico.
Participants belonged to the C-suite or fraud/risk, finance/payments, compliance/operations or product teams of enterprises in retail, marketplace, digital goods, travel and hospitality.
Survey participants worked for businesses with more than $50 million in annual revenue and/or over 500 employees that sell their products either online or both online and offline. They were asked questions about their observations, attitudes, and predictions related to fraud and payments in the past 12 months, at present, and in the future.
