Home Others The Estimated Cost Of E-Commerce Fraud Is Taking Its Toll On Businesses

The Estimated Cost Of E-Commerce Fraud Is Taking Its Toll On Businesses


Ecommerce fraud is a serious problem that is costing businesses lots of money each year, and this issue was particularly highlighted during the height of the COVID-19 pandemic.

Moreover, it was not just businesses who were experiencing the difficulties of fraud, consumers were too. By the end of 2021, the estimated cost of fraud  in the UK was £137 billion! That would have been the equivalent of consumers being able to purchase over 361 million smartwatches and over 27 million round the world flight tickets.

Due to the cost of fraud, consumers could not purchase the items they want, which leads to there being a detrimental effect on businesses. With that in mind, let’s explore the recent state of e-commerce fraud.

What is e-commerce fraud?

Ecommerce fraud is any type of fraudulent activity that takes place on an online platform. This can include anything from counterfeit products to phishing scams. There are many types of e-commerce fraud, but the most common ones are:

  • Counterfeit products: This is when someone sells a fake product that is made to look like the real thing.
  • Phishing scams: This is when someone tries to get your personal information by pretending to be a legitimate website or company.
  • Identity theft: This is when someone uses your personal information without your permission.
  • Credit card fraud: When someone uses your credit card to make unauthorized purchases.
  • Fake reviews: This is when someone leaves a fake review on a product or service.

How does e-commerce fraud impact businesses?

Ecommerce fraud can have a serious impact on businesses, both financially and on their reputation. Some ‌ways it can affect businesses include:

1. Costing businesses money.

The main impact of ecommerce fraud is that it costs businesses money. This is because businesses have to pay for the cost of the fraud itself, as well as the cost of investigating and resolving the issue. In addition, businesses may also lose out on revenue if they have to cancel orders or provide refunds to customers.

In 2021, there were estimations that e-commerce losses to online fraud totalled $20 billion in the US, which was an increase of 14% compared to the $17.5 billion recorded in the previous year.

2. Damaging businesses’ reputation.

Business reputation is essential for any company, but e-commerce fraud can easily damage it. This type of fraud occurs when someone uses a stolen credit card or false identity to make an online purchase.

Most times, the goods are never delivered and they leave the customer with a negative experience. E-commerce fraud can also lead to chargebacks and create challenges for retailers in processing payments, which can cost businesses financially.

This is because customers may lose trust in a business if they have been the victim of fraud. In addition, businesses may also receive negative publicity if their details are leaked as part of a data breach.

Most times, ecommerce fraud is preventable with the right security measures in place. However, even the most well-protected businesses can fall victim to sophisticated attacks. It’s important for businesses to be proactive in their approach to fraud prevention.

3. Preventing businesses from growing.

Ecommerce fraud can also prevent businesses from growing. This is because businesses may be reluctant to invest in new products or services if they are worried about being victims of fraud.

In addition, businesses may also struggle to attract new customers if they have a reputation for being unsafe. E-commerce fraud can have a serious impact on the growth of a business.

Besides the direct financial losses, e-commerce fraud also consumes valuable time and resources that could be better spent on growing the business. As online shopping continues to increase in popularity, businesses must ‌protect themselves from fraudsters.

One way to do this is to invest in sophisticated anti-fraud measures, such as data analytics and machine learning. These technologies can help businesses to identify suspicious activity and prevent fraudulent transactions. By staying ahead of the fraudsters, businesses can protect their bottom line and focus on growth.

4. Leading to job losses.

By using stolen credit card numbers, fraudsters can purchase items without ever having to step foot in a store. This has resulted in a significant increase in the number of chargebacks that retailers have to deal with.

Therefore, businesses may have to cut costs in order to make up for losing revenue. In addition, businesses may also be forced to close ‌if they cannot recover from the financial impact of fraud.

In order to avoid losing money on fraudulent transactions, many retailers have implemented stricter policies that make it more difficult for legitimate customers to make purchases.


Fraud is a problem that has been around for as long as businesses have been exchanging goods and services. In the digital age, e-commerce fraud has become increasingly sophisticated, costing businesses billions of dollars each year.

The good news is that businesses can take several steps to protect themselves from e-commerce fraud. Implementing strong security measures, reviewing your order processes and being vigilant about checking for red flags can also help reduce the risk of fraudulent activities.