Online merchants were hit with many kinds of fraud in 2021, including increases in identity fraud, account takeover (ATO), mobile fraud and more. Most of this fraud is committed by organized, professional criminals using botnets and vast troves of stolen data. However, friendly fraud also continued to rise in 2021. This class of fraud is committed most often by formerly good customers who seek to abuse merchants’ or credit-card issuers’ policies. These one-off instances of fraud bear the risk of becoming larger-scale or habitual fraud.
Promotion abuse fraud also increased in 2021, with customers taking more advantage of loopholes and security gaps in digital coupons and free trials, either on their own or at scale by using social media to share coupon and referral codes beyond the intended scope. Combined with other types of friendly fraud, promotion abuse can cost businesses up to 2.4% of annual revenues, per PYMNTS. Globally, e-commerce fraud losses are expected to top $20 billion in 2021.