From Online Transactions to Portfolio Risk: How E-Commerce Fuels Fraud
This week the Commercial Pulse report dives into the growing problem of commercial forms of fraud.
In some ways, fraud can be seen as a cost of doing business, but the nature of the threat is changing. Today’s fraud environment is larger, faster, and more scalable than at any point in recent history. For Chief Risk Officers and commercial lenders, the challenge is no longer simply preventing isolated incidents. It is understanding how evolving fraud patterns can affect portfolio performance, underwriting decisions, operational costs, and long-term risk exposure.
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According to recent industry estimates, fraud and scam losses reached $38 billion in 2025, impacting approximately 36 million victims across the United States. While these headline figures are concerning, they only tell part of the story. The more important question for risk leaders is what these trends signal about future portfolio performance and whether existing fraud controls are prepared for what comes next.
Digital Growth Has Expanded the Attack Surface
One of the most significant drivers behind the current fraud environment is the continued expansion of digital commerce.
E-commerce now accounts for nearly 17% of total U.S. retail sales, exceeding even peak pandemic levels. The digital transformation of commerce has delivered meaningful efficiencies and growth opportunities, but it has also dramatically expanded the amount of personal and business information available online.
Every digital interaction creates data. When that data is exposed through breaches, phishing attacks, account compromises, or other forms of cybercrime, it becomes fuel for fraud. Stolen information can be leveraged to create synthetic identities, establish fictitious businesses, facilitate account takeover attempts, and support increasingly sophisticated fraud schemes.
For lenders, this means that fraud risk is no longer confined to isolated bad actors. The scale of available compromised information is enabling fraud operations to become more industrialized and difficult to detect through traditional methods.
The Dark Web Has Become a Leading Indicator
Many organizations focus on fraud reports as a measure of current risk. However, some of the most valuable insights may come from indicators that emerge well before losses appear in portfolio performance. Dark web activity is one such indicator.
Experian’s Dark Web Monitoring data identified more than 1.4 billion stolen records during the first quarter of 2026 alone. This sustained volume of compromised information suggests that fraudsters continue to have access to a large and growing inventory of credentials and personal information.
For risk leaders, the implication is straightforward: a growing supply of compromised records creates the conditions for future fraud attempts. By the time fraud appears in application activity, payment performance, or loss reporting, the underlying data exposure has often existed for months.
Monitoring dark web trends can provide an early warning signal that helps organizations prepare for increases in synthetic identity activity, business impersonation attempts, and account takeover events.
First-Party Fraud Is Reaccelerating
While external fraud schemes often receive the most attention, Experian’s commercial data suggests that first-party fraud deserves equal scrutiny.
First-party fraud occurs when an applicant intentionally misrepresents information or obtains credit without the intention of meeting repayment obligations. Unlike traditional third-party fraud, these cases often involve legitimate identities, making detection significantly more challenging.
After a relatively stable period between late 2022 and early 2024, first-party fraud has been steadily increasing since mid-2024.
This trend matters because first-party fraud often appears similar to conventional credit deterioration in its earliest stages. Accounts may initially perform normally before rapidly transitioning into delinquency or charge-off status. As a result, organizations that rely exclusively on traditional credit risk models may underestimate the true level of fraud-related losses within their portfolios.
Business leases experienced some of the highest first-party fraud incidence rates during 2025, but the trend is not isolated to a single product category. Elevated fraud activity has been observed across term loans, lines of credit, commercial cards, and leasing products.
For CROs, this raises an important question: how much of today’s portfolio deterioration is actually fraud-related rather than purely credit-driven?
The AI Gap Is Creating New Risk
Artificial intelligence is reshaping both sides of the fraud equation.
On one hand, fraudsters are leveraging AI to create more convincing synthetic identities, automate attacks, generate fraudulent documentation, and scale operations more efficiently than ever before.
On the other hand, AI-powered analytics offer organizations powerful new tools for fraud detection, behavioral monitoring, and anomaly identification.
The challenge is that adoption has not kept pace with awareness.
Recent research found that 72% of businesses expect AI-generated fraud and deepfakes to become a major operational challenge within the next two years. Yet only 37% report actively using AI-enabled fraud prevention capabilities today.
This disconnect represents one of the most significant vulnerabilities in the current fraud landscape.
Many organizations continue to rely heavily on traditional authentication methods such as passwords, PINs, security questions, and CAPTCHA controls. While these tools remain useful, they were not designed to address today’s increasingly sophisticated fraud tactics.
Organizations that delay modernization efforts may find themselves operating with controls that were built for a fundamentally different threat environment.
Three Indicators Every CRO Should Monitor
As fraud risk continues to evolve, three areas deserve particular attention.
Looking Ahead
Fraud is no longer simply an operational issue. It has become a strategic risk management challenge that intersects with credit performance, customer experience, regulatory expectations, and enterprise resilience.
The organizations that succeed in this environment will not be those that simply react to fraud events. They will be the ones that identify leading indicators earlier, integrate fraud intelligence across the customer lifecycle, and modernize their risk frameworks before losses force the issue.
For CROs, the question is no longer whether fraud risk is increasing. The question is whether existing controls, analytics, and governance structures are evolving quickly enough to keep pace.
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