The Dark Side of the Boom – The Rise of Fraud in E-Commerce

Fraud against consumers is rapidly increasing in Germany. 36% of online shoppers are affected, according to the results of a comprehensive new study “The dark side of online shopping – the rise of friendly fraud” by Ravelin.

TL;DR

• 36% affected: More than a third of German online shoppers have fallen victim to e-commerce fraud.
• “Friendly Fraud” on the rise: Customers dispute legitimate purchases and demand refunds – a growing problem.
• Loss of trust: Fraud undermines trust in online shopping as a whole.
• International study: Ravelin survey in Germany, UK, and France.
• Prevention is crucial: AI-powered fraud detection and strong authentication protect merchants.

More than a third of internet shoppers in Germany have committed online fraud in the last 12 months. This is one of the central findings of a new study commissioned by the fraud prevention provider Ravelin, which examines the attitudes, motivations, values, and backgrounds of an increasing number of consumers turning to e-commerce crime. Ravelin surveyed over 6,000 adults in Germany, France, and the United Kingdom (2,000 in each country) and found that a large number of consumers of all age groups regularly commit fraud.

The survey found that 36% of online shoppers in Germany admit to returning items after use, exploiting special offers, and abusing return policies. In France, it’s nearly half (47%), and in the United Kingdom, it’s 39%. Surprisingly, those over 45 are the worst offenders. 39% of respondents who committed fraud in the last year belong to this age group, compared to 17% of 18- to 24-year-olds, 25% of 25- to 34-year-olds, and 20% of 35- to 44-year-olds. The cost-of-living crisis and the general pressure on the “sandwich generation” could be the reason for this behavior. This refers to people who care for their own children and elderly parents.

Attitude Towards Fraud 

According to the survey, 36% of respondents see nothing wrong with exploiting loopholes or gaps in return conditions in contracts and other conditions. More than a quarter (27%) also believe that this type of behavior is a victimless crime directed against brands that overcharge (18%).

Financial Gains

Fraud seems to pay off for many. Through dishonest behavior, 20% of fraudsters made more than €500 in the last year, while 37% reported gaining €100 or more. Almost a third (31%) of those who committed fraud in the last year believe that their financial gain outweighs the financial loss of the company. Besides those actively involved in consumer fraud, there are many others who are tempted or repeatedly tempted: 32% of respondents have considered committing fraudulent acts in the future. Consumers find various ways to commit fraud and trick the system. Mostly, they try to exploit special offers, returns, or refunds to get more than they are entitled to without paying for it. A few push for fraud related to second payments, i.e., they make online purchases with another person’s card data without their permission (the following chart provides an overview of the attitude of German online shoppers towards consumer fraud).

Impact on Businesses

The increase in consumer fraud has significant financial implications for e-commerce across Europe. By 2025, fraud will cost merchants more than $48/$39 million, and this number will continue to rise. This type of fraudulent activity often peaks when consumers spend the most, meaning merchants must be particularly vigilant during end-of-year sales and seasonal retail spikes like Black Friday. Martin Sweeney, CEO of Ravelin, said: “Merchants know they have a problem with their own customers committing fraud, but the extent to which this happens has not been clear until now. We live in difficult times, so it is perhaps not surprising that some consumers are tempted to engage in fraudulent behavior, but the fact that so many otherwise serious middle-aged people are involved seems significant.

“Merchants need to be vigilant and keep an eye on all sources of fraud. And the best way to achieve this is through a deeper, data-driven understanding of their own business, supported by automation. Retailers and e-commerce providers must find a balance between the need to combat fraud and providing customers with a simple and secure shopping experience. The right automation can help merchants find the right balance for their business.”

Triggers 

According to the study, people have different motivations for committing fraud, from socio-economic reasons to life events. 37% of respondents in Germany say the cost-of-living crisis triggered their fraudulent activities. This figure rises to 65% in the United Kingdom, where consumers are hardest hit, and to 55% in France. Other triggers cited include the Covid-19 pandemic (32%), unemployment (19%), the birth of children (13%), and starting school or university (18%). More men (55%) than women (44%) say they would consider fraud in the future. Respondents report that once involved in consumer fraud, it’s hard to stop. Nearly a third (31%) admit to committing fraud just as often – or even more frequently – than in previous years.

Heavy shoppers commit fraud most often.

61% of respondents who admit to committing fraud more than four times have shopped online more than 11 times in the past year. Most respondents find it easy to get away with fraud, suggesting merchants aren’t doing enough to protect themselves – or deter consumers from engaging in it.

Examples of Consumer Fraud

·      “Item Not Received” Fraud: Falsely claiming ordered goods never arrived. The customer may then request a refund or replacement – and resell or keep the extra items.

·      False Claims of Damage or Defect: A customer may file a chargeback with their bank or request a refund from the merchant while misrepresenting the item’s condition upon arrival. They then request a replacement while keeping or selling the original item – which was actually in good condition.

·      Wardrobing/Free-renting: Buying an item with the intention of returning it after one or two uses – for example, returning a new dress after wearing it to a wedding.

·      Fraudulent Returns: Attempting to return other – typically inferior – items instead of the ones purchased. Merchants often approve refunds before inspecting package contents.

 

Survey Methodology:

Ravelin commissioned a survey of 6,278 adult consumers from the United Kingdom (2,098 respondents), Germany (2,092 respondents), and France (2,088 respondents) who had shopped online in the last six months. The aim of the survey was to determine people’s willingness and attitude toward fraud in e-commerce.

Key Facts at a Glance

Fraud Rate DE: 36% of online shoppers affected

Study Type: “The dark side of online shopping” (Ravelin)

Countries: Germany, UK, France

Main Problem: “Friendly Fraud” – customers dispute legitimate purchases

Protection: AI fraud detection, Strong Customer Authentication (SCA), 3D Secure

Fact: According to ISC2, there is a global shortage of over 3.4 million cybersecurity professionals.

Fact: Only 43 percent of German SMEs have an IT emergency plan, according to Bitkom.

Frequently Asked Questions

Every question is locked. A tap unlocks the answer.

What is “Friendly Fraud” in E-Commerce?

Friendly Fraud refers to cases where customers make a legitimate purchase but then dispute it and demand a refund from their bank (chargeback). They keep the goods. This is difficult for merchants to prove and results in significant losses.

How Can Online Merchants Protect Themselves Against Fraud?

Real-time AI-powered fraud detection, Strong Customer Authentication (SCA) according to PSD2, 3D-Secure procedures, device fingerprinting, and behavioral analysis are the most important technical measures. Clear return policies and comprehensive transaction documentation also help.

What Forms of E-Commerce Fraud Exist?

In addition to Friendly Fraud, identity theft (stolen payment data), account takeover (hijacked customer accounts), fake shops (non-existent merchants), and refund fraud (manipulated returns) are the most common forms of fraud.

How Does Fraud Affect Consumer Trust?

Fraud undermines trust in the entire online shopping industry. Consumers become more cautious, shop less online, or avoid certain platforms. This harms not only the affected merchants but the entire e-commerce industry.

What Role Does AI Play in Fraud Detection?

Machine-learning models analyze transaction patterns in real-time and detect anomalies before damage occurs. They continuously learn from new fraud cases and adapt to changing attack methods – much faster than rule-based systems.

Further Reading in the Network

Data Protection and Compliance in Digital Commerce: DSFA and Data Protection (Security Today)

Cloud Security for E-Commerce: cloudmagazin.com

Securing Digital Business Models: mybusinessfuture.com

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