At A Glance
As e-commerce grows by leaps and bounds, so do fraud incidents. Merchants and retailers can better prepare by leveraging advanced e-commerce fraud prevention tools.E-commerce is booming. Global online sales continue to rise with forecasts predicting growth to $7.89 trillion by 2028. Unfortunately, with any lucrative market comes fraudulent activity. As e-commerce grows by leaps and bounds, so do fraud incidents. E-commerce fraud is defined as any illegal or deceptive activity conducted during an online transaction with the intent to steal money, goods or sensitive information. As digital shopping flourishes, the tactics criminals use to exploit vulnerabilities in payment systems, customer accounts and merchant operations is rapidly expanding.
According to Experian’s tenth annual Identity & Fraud Report, nearly 60% of U.S. businesses reported higher fraud losses in 2025, driven by more sophisticated attacks and legacy security gaps. The same report highlighted the damage from e-commerce fraud goes beyond the loss of revenue, directly impacting consumer trust. The survey found that only 13% of consumers feel fully secure opening new accounts. Chief amongst their concerns, 68% of consumer worry about identity theft, while 61% are fearful of stolen credit card data.
The constant threat of e-commerce fraud has placed tremendous pressure on merchants and retailers to take robust steps in mitigating these attacks. In addition to protecting the bottom line, such measures are essential to earning consumer trust. According to Experian’s merchant-focused edition of our Identity & Fraud Report, consumers consistently perceive physical and behavioral biometrics tools as the most secure authentication methods — yet merchants are slow to adopt them. This gap highlights a key opportunity for businesses to strengthen security practices and build trust without adding friction to the user experience. After all, 74% of consumers say security is the most important factor when deciding to engage with a business.3
E-commerce fraud comes in many shapes and sizes
E-commerce fraud is an umbrella term for a variety of attacks that target merchants and retailers. Amongst these is chargeback fraud, which occurs when a customer makes a legitimate purchase and then falsely disputes the charge with their credit card issuer, claiming the item never arrived or the transaction was unauthorized. The merchant loses both the product and the payment.
Another is account takeover fraud, which happens when cybercriminals gain access to a customer’s online account, often through stolen login credentials, and use it to make unauthorized purchases, change shipping details or withdraw loyalty points.
In card-not-present (CNP) fraud, attackers use stolen credit card information to make purchases online or by phone, where the physical card isn’t required. Because identity verification is limited, merchants bear the financial losses. This type of fraud includes BIN attacks, targeting the Bank Identification Number (BIN) on a credit or debit card that identifies the issuing financial institution. The goal of a BIN attack is to discover valid card numbers that can be used for fraudulent transactions.
There are also refund fraud attacks, which involve scammers exploiting return or refund policies — such as claiming an item didn’t arrive or sending back a different or counterfeit product for reimbursement.
Together, different forms of e-commerce fraud cost businesses billions annually, demanding strong fraud detection, authentication and monitoring systems to combat them. E-commerce fraud prevention should be a priority for every merchant and retailer.
E-commerce fraud prevention: Ways merchants can fight back
Merchants report the highest rates of new account fraud, yet it ranks just 15th among their active investments for 2025.
While fraudsters continue to find new and innovative ways to attack, merchants and retailers can better prepare by following industry best practices in e-commerce fraud prevention:
- Chargeback fraud: When it comes to preventing and managing chargeback fraud, merchants should ensure customers are fully aware of return and refund policies. Utilize Address Verification Services (AVS) and Card Verification Value (CVV2) verification for online and over-the-phone transactions to establish the validity of a purchase. Keeping meticulous records of all transactions can serve as compelling evidence to defend the transaction. Leverage advanced fraud detection tools, such as tokenization and machine learning and AI fraud detection solutions that flag potentially fraudulent transactions and detect suspicious spending patterns and anomalies.
- Account takeover fraud: Merchants can minimize the risk of account takeover fraud using holistic, risk-based identity and device authentication, as well as behavioral analytics or targeted, knowledge-based authentication. End-to-end fraud management solutions can help reduce manual processes and remove the risk of information silos.
- Card-not-present fraud: Mitigating the risk of CNP fraud can be accomplished by implementing additional security measures at the time of transaction. These can include requiring verification information, such as a CVV code or a billing zip code to further authenticate the card holder’s identity.
Advanced e-commerce fraud prevention tools
To stay ahead of the fraudsters, merchants and retailers should take a multilayered approach to e-commerce fraud prevention that takes advantage of the latest, most advanced tools. At Experian®, we offer innovative fraud management solutions that provide the right level of security without causing customer friction.
Three advanced e-commerce fraud prevention tools that every merchant should have in their arsenal include:
Experian Account Ownership Verification: This tool enhances credit card authentication by linking the payment instrument with the digital identity presented for payment. Experian Account Ownership Verification enables merchants to quickly and accurately identify legitimate customers to reduce friction and increase acceptance rates, reduce operation costs by preventing fraudulent credit card use, make better risk decisions to protect legitimate customers, limit false declines and identify potential fraudsters.
Behavioral analytics: With the growth of AI, fraudsters can now replicate static data, but mimicking human behavior remains challenging. Behavioral analytics detects subtle interaction patterns that are extremely difficult for GenAI-driven fraudsters, including fraud rings and next-generation fraud bots, to replicate. Powered by NeuroID, our behavioral analytics capabilities help organizations proactively mitigate fraud, reduce false positives and streamline risk detection, ultimately creating a secure and frictionless experience for trustworthy users — while locking out fraudsters earlier.
Precise ID®: This advanced tool enables businesses to pursue growth confidently by providing robust, real-time identity verification, as well as the ability to accurately identify a wide range of fraud risks including identity theft, synthetic identity and first-party fraud, along with tools that facilitate confirmation when risks are detected.
The threat of fraud never stops
Merchants and retailers are under a constant and unrelenting threat of attacks by fraudsters. Vigilance is required to protect the customer experience and the bottom line. Fortunately, innovative tools are leveling the playing field, offering much needed e-commerce fraud protection.
To learn how Experian can help you combat fraud and meet consumers’ demands for trust and privacy, explore our best-in-class fraud management solutions and download our latest report on closing the trust gap in e-commerce.
