Organized Crime Costs Ecommerce Brands Billions as Global Fraud Enterprises Step Up Attacks, a New Signifyd Study Finds

Signifyd’s State of Fraud and Abuse 2024 report highlights the industrialization of online fraud, detailing the growing threat of first-party fraud and the increasing overlap of ecommerce fraud and traditional cybercrime.

Highly sophisticated fraud rings have stolen billions of dollars in goods from online brands in the U.S. while rapidly shifting their tactics and strategies, adding a devious digital twist to organized retail crime.

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“The State of Fraud and Abuse 2024” report highlights the industrialization of online fraud, detailing the growing threat of first-party fraud and the increasing overlap of ecommerce fraud and traditional cybercrime. Among the signs of the rise of industrialized fraud detailed in the report:

• Attempts at placing fraudulent orders increased 19% in the first half of 2024 compared to the previous year, according to Signifyd data.
• 13% of orders now include signs of address manipulation, a fraud-ring tactic that attempts to outsmart machine learning models’ ability to recognize addresses with a history of fraud.
• Cases of attempted reshipper fraud are up 50% in 2024, a sign that crime rings increasingly rely on go-betweens to mask their role in online orders while moving stolen goods out of the United States.
• Professional fraud rings have significantly expanded into non-payment fraud, often labeled first-party fraud and abuse, as they look for new revenue streams. These efforts include “fraud-as-a-service” operations through which fraud rings commit return and refund fraud on behalf of consumers for a cut of the profits.

As trend lines move toward more and more complex online fraud, retailers will need to resist the impulse to overcorrect, leading them to reject good orders. For their part, consumers should consider carefully monitoring their bank, credit and retail accounts for signs those accounts have been compromised.

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“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 ecommerce merchants,” Signifyd CEO Raj Ramanand said. “The challenge for retailers is to avoid falling prey to these sophisticated attacks while still providing a best-in-class customer experience and preserving their hard-earned customer lifetime value. Fortunately, fraud protection leaders continue to innovate and add the machine learning and data science resources needed to stay a step ahead.”

The State of Fraud and Abuse report explores the growing role of fraud and cybercrime compounds in Southeast Asia staffed through human trafficking, as reported by the United Nations, and the new fraud-as-a-service trend, which experts say encourages otherwise upstanding consumers to seek illegitimate refunds.

One Vietnam-based ring targeted an estimated $4.7 billion in goods nationwide and successfully stole $940 million in merchandise in a matter of months, according to a Signifyd analysis. Overall, fraudsters cost U.S. ecommerce retailers $48 billion last year, Juniper Research reported.

The report also details the evolving applications of AI both by criminal rings, leaning into deep fakes, and by fraud prevention professionals deploying machine learning to protect the entire buying process — including account security and post-purchase activities, such as refund and return requests.

“Fraudsters are managing large, criminal enterprises,” said Xavi Sheikrojan, Signifyd’s 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. We are certainly up to the task of undermining them, but it requires determined vigilance.”

The State of Fraud and Abuse report also digs into the ongoing efforts by merchants and commerce protection experts to turn back the increasing wave of fraudulent activity, including analyses of key retail verticals and ongoing efforts to design systems to shift fraud liability away from online brands.