32 Fraud Detection Rate Statistics for eCommerce Stores

Essential data on fraud prevention benchmarks, detection accuracy rates, and the financial impact of identity verification for online retailers

Fraud remains one of the most persistent threats to eCommerce profitability, with global losses reaching $44.3 billion in 2024 alone. For online retailers, the ability to detect fraudulent transactions while approving legitimate purchases directly impacts revenue, customer trust, and operational efficiency. Brands using identity resolution to verify visitor authenticity gain a critical advantage in distinguishing genuine customers from bad actors before fraud occurs.

Key Takeaways

• Fraud detection is improving — Global fraud rates by order declined from 3.4% to 3.0% in 2025, showing measurable progress in prevention efforts
• AI accuracy transforms detection — Machine learning fraud systems achieve 95% detection accuracy while reducing false positives by 40%
• False positives cost more than fraud — Merchants lose 13 times more to incorrectly declined legitimate orders than to actual fraud
• Most merchants remain vulnerable — 98% of merchants experienced at least one fraud type in the past 12 months
• Automation adoption is low — Only 6% of US businesses have fully automated their fraud prevention systems
• Identity verification is essential — 50% of merchants now use identity verification services as a core fraud prevention tool
• Market investment is accelerating — Fraud detection spending will reach $217.8 billion by 2035, growing at 17.5% CAGR

Understanding eCommerce Fraud: Types and Implications

1. 98% of merchants experienced fraud in the past 12 months

Nearly every online retailer faces fraud attacks, with 98% reporting one or more fraud types affecting their business in the past year. This near-universal exposure demonstrates that fraud is not an edge case but a fundamental operational challenge requiring proactive defenses against multiple simultaneous attack vectors.

2. Refund and policy abuse impacts 47% of merchants globally

The most common fraud type affecting online retailers is refund abuse, impacting 47% of merchants worldwide. This friendly fraud involves customers exploiting return policies, claiming non-receipt, or requesting refunds for retained products, making it challenging to distinguish legitimate service issues from intentional abuse.

3. Phishing attacks affect 43% of merchants worldwide

Credential theft through phishing remains a dominant attack vector, affecting 43% of merchants globally. These attacks target both customer accounts and internal systems, creating vulnerabilities that fraudsters exploit for unauthorized purchases. The increasing sophistication of phishing campaigns makes employee training and customer education critical defenses.

4. First-party misuse impacts 42% of merchants globally

Friendly fraud, where legitimate customers dispute valid charges, impacts 42% of merchants according to industry data. This fraud type proves particularly difficult to detect because it originates from real customers using legitimate payment credentials. Growth in friendly fraud correlates with increased consumer awareness of chargeback processes.

5. 40% of global eCommerce fraud attacks originate in the United States

Despite advanced fraud prevention infrastructure, 40% of global attacks originate from within the United States. This concentration reflects both the size of the US eCommerce market and the sophistication of domestic fraud networks. Merchants operating primarily in US markets face proportionally higher attack volumes requiring robust detection capabilities.

Key Statistics on Fraud Detection Rates in eCommerce

6. Global fraud rate by order declined from 3.4% to 3.0%

The overall fraud rate measured by order volume improved from 3.4% to 3.0% globally in 2025. This improvement represents significant progress in detection capabilities across the industry. For merchants processing 100,000 orders annually, this reduction translates to approximately 300 fewer fraudulent transactions reaching completion.

7. eCommerce revenue lost to payment fraud decreased from 3.6% to 2.9%

Year-over-year data shows payment fraud losses declining from 3.6% of eCommerce revenue in 2022 to 2.9% in 2023. This trend indicates that fraud prevention investments generate measurable returns. For retailers with $10 million in annual revenue, this improvement represents $70,000 in preserved revenue annually.

8. Order rejection rates declined from 5.8% to 5.0% globally

Merchants are becoming more accurate at identifying fraud while reducing false rejections from 5.8% to 5.0% of orders. This improvement reflects better calibration of fraud rules and adoption of sophisticated detection tools. Lower rejection rates mean more legitimate customers complete purchases while fraud remains effectively blocked.

9. North America fraud rate reached 2.8% in 2025

North American merchants now see a 2.8% fraud rate by revenue, down from 3.6% previously. This significant improvement demonstrates the effectiveness of fraud prevention investments in mature markets. The region's adoption of advanced authentication and identity verification tools contributed substantially to this decline.

10. AI-powered fraud detection achieves 95% accuracy

Machine learning systems now reach 95% accuracy rates for credit card fraud detection, far exceeding rule-based approaches. This accuracy level allows merchants to catch more fraud while maintaining high approval rates for legitimate transactions. The continuous learning capability means AI systems improve over time as they process more transaction data.

The Cost of Fraud: Beyond Monetary Losses

11. Global fraud losses reached $44.3 billion in 2024

Online payment fraud extracted $44.3 billion globally from the eCommerce ecosystem in 2024. This figure represents direct losses from fraudulent transactions before accounting for operational costs, chargebacks, and reputational damage. The scale of these losses justifies substantial investment in prevention technology and comprehensive fraud management processes.

12. Online payment fraud projected to exceed $343 billion through 2027

Cumulative fraud losses are projected to exceed $343 billion globally between 2023 and 2027. This staggering five-year total underscores the urgency of implementing effective detection strategies. Physical goods purchases account for 49% of these losses, making product-based eCommerce particularly vulnerable to fraud attacks.

13. US merchants pay $4.61 for every $1 of fraud

The true cost of fraud extends far beyond the transaction value, with US merchants paying $4.61 for every dollar lost to fraud. This multiplier includes chargeback fees, investigation costs, labor, and merchandise replacement. Understanding this total cost justifies prevention investments that might otherwise seem expensive when considering only transaction values.

14. Merchants lose 13 times more to false positives than actual fraud

Perhaps the most striking cost statistic: businesses lose 13 times more to false positive declines than to actual completed fraud. This imbalance occurs because overly aggressive fraud rules reject legitimate high-value customers, creating immediate revenue loss and long-term customer attrition. Balancing fraud prevention with customer approval proves critical.

15. US merchants lose nearly $118 billion annually to false declines

False positive losses reach $118 billion annually for US merchants alone, dwarfing actual fraud losses. These declined legitimate transactions represent customers who wanted to purchase but were incorrectly flagged as fraud risks. Many of these customers never return after experiencing false declines, compounding the long-term revenue impact.

16. Businesses spend 10% of annual revenue on fraud management

The operational burden of fraud management consumes 10% of annual revenue on average for eCommerce businesses. This includes technology costs, manual review teams, chargeback processing, and customer service related to fraud disputes. Efficient automation can significantly reduce this operational overhead while simultaneously improving detection rates and customer satisfaction.

17. Fraud increases customer churn for 63% of merchants

Beyond direct financial losses, 63% of merchants report that fraud directly increases customer churn rates. When legitimate customers experience false declines or account compromises, their trust erodes significantly. This churn creates acquisition cost pressure as merchants must constantly replace lost customers, adding to the total cost of inadequate fraud prevention.

Leveraging Identity Resolution for Enhanced Fraud Prevention

18. 50% of merchants use identity verification services

Half of all merchants now employ identity verification services as a core component of their fraud prevention strategy. These tools validate that customers are who they claim to be before transactions are processed. Cross-device tracking capabilities enable merchants to recognize returning customers across multiple devices, building confidence profiles that distinguish loyal shoppers from fraudulent actors.

19. 82% of merchants struggle with using data effectively

Despite available technology, 82% of merchants struggle to effectively use data for fraud management decisions. This gap between data availability and actionable intelligence represents a significant opportunity for improvement. Identity resolution platforms that unify customer data across touchpoints help merchants build comprehensive profiles for more accurate and informed risk assessment.

20. Only 6% of US businesses fully automate fraud prevention

Automation remains drastically underutilized, with just 6% of businesses fully automating their fraud prevention workflows. This low adoption rate explains why many merchants still experience high fraud rates despite available technology. Automated identity verification eliminates manual review bottlenecks while improving consistency, speed, and accuracy across all transactions processed.

21. 41% of North American merchants depend on manual processes

A significant portion of merchants still rely on manual fraud review processes, creating scalability limitations and inconsistent results. Manual reviews cannot keep pace with transaction volumes during peak periods, leading to either excessive delays or relaxed standards. Automated identity graph solutions process thousands of verifications instantly without requiring human intervention.

Advanced Fraud Detection Tools and Technologies

22. AI reduces false positives by 40% compared to rule-based systems

Machine learning approaches reduce false positives by at least 40% versus traditional rule-based fraud detection methods. This improvement directly translates to more approved legitimate orders and higher customer satisfaction rates. AI-powered tools can analyze behavioral patterns to identify anomalies indicating fraud while recognizing normal customer behavior variations effectively.

23. 55% of merchants use credit card verification services

Credit card verification remains the most widely adopted fraud tool, with 55% of merchants implementing these services for transaction security. Basic verification like CVV matching and address verification provide foundational protection against unauthorized purchases. However, sophisticated fraud increasingly bypasses these controls, requiring additional layers of comprehensive identity verification for complete protection.

24. 40% have adopted Strong Customer Authentication

Following regulatory requirements in many markets, 40% of merchants now implement Strong Customer Authentication methods. This multi-factor approach significantly reduces unauthorized account access and fraudulent transactions. Merchants report substantially lower fraud rates after SCA implementation, though checkout friction requires careful optimization to maintain conversion rates.

25. Automated payment retries adopted by 39% of merchants

To reduce false declines, 39% of merchants now use automated retry systems for declined payments. These tools automatically reprocess declined transactions with optimized parameters, recovering orders that would otherwise be lost to technical issues. Combined with intelligent fraud scoring, retries capture legitimate revenue without increasing fraud exposure or compromising security.

26. 80% of merchants use outsourced fraud detection tools

The majority of online retailers rely on external fraud detection solutions rather than building in-house capabilities from scratch. This outsourcing trend reflects the specialized expertise and data network advantages that dedicated fraud vendors provide. Third-party solutions often leverage consortium data from thousands of merchants to identify emerging fraud patterns more effectively.

Building a Robust Fraud Prevention Strategy

27. Merchants use an average of 5 fraud detection tools

The complexity of modern fraud requires layered defenses, with merchants deploying an average of 5 different tools simultaneously for comprehensive protection. This multi-tool approach creates overlapping protection against various attack vectors and fraud types. Integration between tools remains challenging, highlighting the value of unified platforms that consolidate multiple fraud prevention capabilities.

28. Fraud detection market reached $43.4 billion in 2025

Investment in fraud prevention technology has created a $43.4 billion market as of 2025, reflecting merchant prioritization of security. This substantial market size demonstrates the recognition of fraud as a critical business challenge. The investment creates competitive pressure that drives continuous innovation in detection capabilities and fraud prevention methodologies.

29. Market projected to reach $217.8 billion by 2035

Long-term projections show fraud detection spending reaching $217.8 billion by 2035, representing 17.5% compound annual growth. This trajectory indicates sustained investment as eCommerce grows and fraud techniques evolve in sophistication. Merchants who delay fraud prevention investment face increasing competitive disadvantage as fraudsters target the most vulnerable retailers.

30. Intelligent automation reduced chargebacks by 85% in one case study

Case studies demonstrate significant results from fraud prevention automation. Harry's, a men's grooming brand, saw an 85% reduction in chargebacks within two months of implementing Sift's intelligent automation platform, showcasing the potential impact of advanced fraud detection tools when properly deployed and optimized for specific business needs.

31. Fraud losses projected to exceed $91 billion by 2028

Near-term projections indicate annual fraud losses will exceed $91 billion by 2028, nearly doubling current levels without intervention. This growth trajectory makes compliance-focused prevention essential rather than optional for sustainable eCommerce operations. Merchants who build fraud prevention into their compliance infrastructure gain operational efficiency alongside significant risk reduction.

32. 64% say fraud hurts customer conversion rates

The impact of fraud extends to legitimate customer experience, with 64% of merchants reporting that fraud prevention measures hurt conversion rates. This tension between security and experience requires sophisticated approaches that verify identity without creating checkout friction. The best fraud prevention remains invisible to legitimate customers while effectively blocking bad actors.

Building Your Fraud Prevention Strategy

Effective fraud prevention requires attention to key regulatory frameworks that protect both merchants and customers. CCPA and GDPR compliance ensures customer data is handled appropriately throughout the verification process. PCI DSS standards protect payment information throughout all transactions, while CAN-SPAM compliance maintains email marketing integrity and customer trust.

Balancing security with customer experience requires a multi-layered approach. Real-time risk scoring enables merchants to approve low-risk transactions instantly without delays. Step-up authentication should only trigger for genuinely suspicious activity, not routine purchases. Consistent identity recognition across customer sessions reduces friction for returning shoppers, while clear communication when additional verification is needed maintains transparency and trust.

False positive rates continue improving across the industry. Merchants with false positive rates above 10% declined from 19% to 14% of the total merchant population. Around 60% of merchants currently maintain false positive rates between 2% and 10%, while industry leaders achieve sub-2% false positive rates through advanced AI and machine learning implementations.

Taking Action on Fraud Prevention

Modern eCommerce fraud prevention requires a comprehensive approach that combines advanced technology with strategic implementation. Identity resolution platforms enable merchants to verify visitor authenticity before transactions occur, creating a critical first line of defense against fraud. By recognizing genuine customers through cross-device tracking and building comprehensive visitor profiles with AI-powered segmentation, retailers can dramatically improve fraud detection accuracy while reducing false positive rates that damage revenue and customer relationships.

The statistics demonstrate clearly that fraud prevention investment delivers measurable returns through reduced losses, lower operational costs, and improved customer experience. Success requires balancing security measures with seamless shopping experiences, leveraging automation to scale effectively, and utilizing identity verification to distinguish legitimate customers from fraudulent actors throughout the customer journey.

Frequently Asked Questions

What is the average fraud detection rate for eCommerce stores?

Current industry data shows fraud detection rates improving significantly, with global fraud rates by order declining from 3.3% to 3.0% in 2025. AI-powered systems achieve 95% accuracy for credit card fraud specifically. Detection effectiveness varies substantially based on the tools deployed, with merchants using multiple layered solutions achieving the best results.

How does identity resolution contribute to fraud prevention?

Identity resolution creates unified customer profiles by connecting data across devices, sessions, and touchpoints. This comprehensive view allows merchants to distinguish returning legitimate customers from first-time fraud attempts. Platforms like Opensend Connect help identify high-intent visitors in real-time, which proves essential for separating genuine shoppers from fraudulent actors attempting to exploit anonymous browsing.

What are the most common types of fraud affecting online businesses?

The three most prevalent fraud types are refund and policy abuse (affecting 47% of merchants), real-time payment fraud (45%), and first-party misuse or friendly fraud (42%). Phishing attacks also remain significant, impacting 43% of merchants globally. Each fraud type requires different prevention approaches within a layered security strategy.

Can a high fraud detection rate negatively impact legitimate customers?

Yes, overly aggressive fraud detection creates significant false positive problems. Merchants lose 13 times more to incorrectly declined legitimate orders than to actual fraud. US merchants specifically lose $118 billion annually to false declines. Effective fraud prevention balances detection accuracy with approval rates to capture more legitimate revenue.

What role do AI and machine learning play in modern fraud detection?

AI and machine learning have transformed fraud detection accuracy, achieving 95% detection rates while reducing false positives by 40% compared to rule-based systems. These technologies analyze hundreds of signals per transaction to identify fraud patterns that manual rules miss. The continuous learning capability means AI systems improve over time as they process more transaction data.