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Retailers hit by growing fraud during cost of living crisis

by LLB Reporter
16th Oct 23 11:25 am

Online grocery retailers are being hit by a triple whammy of fraud as the cost of living crisis bites, according to a new report from Ravelin.

A key risk factor for most merchants in the sector is the rise of friendly fraud, which includes chargebacks, promotions and policy abuse by retailers’ own customers.

Over a third of finance leaders describe first party frauds including “friendly fraud”, as the number one risk factor facing their business. The rise in this type of customer specific fraud is strongly linked to the cost of living crisis.

In addition, account takeover (ATO), and online payment fraud are having a major impact, according to Ravelin’s Global Fraud Trends 2023 report.

Ravelin CEO Martin Sweeney, said, “The online grocery space has seen astronomical growth in recent years. Alongside this fast growth we’ve seen a rapid rise in fraud impacting merchants operating in the sector.“Grocery retailers continually walk an uneasy line between making compelling offers which entice customers to switch, and protecting their business. The result can be large upswings in fraud and abuse which lead to avoidable financial losses, and increased demands on fraud investigation teams.

“Retailers can manage their risk exposure more closely by embracing automation. Building the right capabilities into their existing systems enables fraudulent transactions to be nipped in the bud, and frees human fraud investigators so they can focus on helping retailers maximise their growth opportunities.

“Grocery merchants must be able to combat new and existing forms of fraud without impacting customer conversions.”

Criminals continue to target customers

The report also shows account takeover (ATO) attacks are on the rise globally, as customers are duped by criminals into schemes which steal their login details to popular websites. In the UK almost half (48%) of merchants say this type of fraud has increased. The number of attacks are even higher in other parts of the world with Canada showing a 70% increase.

Almost 60% of merchants globally say online payment fraud, for example from stolen cards, has increased over the past 12 months. In the UK 65% are seeing an increase.

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