SAN JOSE, Calif. — The incidence and the complexity of online fraud is ramping up and the home goods category is not immune, according to a new report from Signifyd. Attempts at placing fraudulent orders rose by 19% between the first half of 2023 and 2024, with online brands losing an estimated $48 billion to fraud in 2023.
Citing numbers from Juniper Research, the Signifyd report says e-commerce fraud losses between 2023 and 2027 are likely to top $343 billion.
Looking at the home category — one of six verticals tracked — attempted payment fraud skyrocketed in the first half of the year, with fraud pressure showing a 32.3% increase over the same period in 2023. Attacks, which were down for the first three months of the year, began climbing in April and were at their highest in May — up 110% year-over-year — before dropping to a year-over-year increase of 53% in June.
The report noted that consumer abuse can be particularly difficult for home goods sellers to anticipate and prevent because of the category’s lower purchase frequency. Infrequent purchases give retailers limited visibility to the identity and intent of fraudulent purchasers, the report said.
Among the different types of fraud being carried out, Signifyd reported that 13% of orders include signs of address manipulation, which is a fraud ring tactic that attempts to outsmart machine learning models’ ability to recognize addresses with a history of fraud.
Reshipper fraud attempts up are 50% in 2024, and first-party fraud was reported by 60% of online brands.
Fraud-as-a-service, in which fraud rings commit return and refund fraud on behalf of consumers who get a cut of the profits, is on the rise as well, in part because of the current economy and consumers’ desire to continue with their current lifestyle even though they can’t afford it. To get what they want, the report noted, they look to exploit returns or loopholes.
“The growing prominence of global fraud rings is not new, but the acceleration of that growth and the adoption of increasingly sophisticated tactics and operations is worrisome for e-commerce merchants,” said Raj Ramanand, CEO of Signifyd. “The challenge for retailers is to avoid falling prey to these sophisticated attacks while still providing best-in-class customer experience and preserving their hard-earned customer lifetime value.”
The report notes that artificial intelligence is being employed by both sides.
“Fraudsters today are managing large, criminal enterprises,” said Xavi Sheikrojan, senior manager-risk intelligence. “They plot out annual roadmaps. They look for new revenue streams and assess ROI before deciding where and how to strike next.”
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