Online retailers are losing millions to fraud each year, and many are making the problem worse by prioritising customer loyalty over meaningful fraud prevention.
This is one of the key findings from Ravelin’s annual Global Fraud Survey 2025, which paints a picture of escalating fraud and widespread hesitation to act.
The imbalance in approach means the issues companies are experiencing with fraud, particularly refund abuse, are worsening. Based on a survey of hundreds of leading global eCommerce merchants, 77 per cent saw a year-on-year rise in fraud, and most believed that consumers pose as much of a threat as professional fraudsters.
Over half (54 per cent) of merchants say refund abuse has increased while 55 per cent agree it will continue to rise in the next year. 43 per cent receive refund requests on more than 5 per cent of their sales and 9 in 10 say seamless refunds are important to their business model.
The average business is now losing $10.6 million (£8,183 million) annually to fraud. Retail and travel are the most impacted sectors, with both showing an annual average loss of $11 million to fraud.
Despite the financial hit, 66 per cent of merchants consider customer loyalty and brand reputation more important than stopping refund abuse. 38 per cent of responders cited friction and customer churn as the biggest obstacles to efficient fraud prevention.
Yet, when done correctly, fraud prevention actually improves customer experiences. Good fraud prevention does not equal friction for most shoppers.
Ravelin CEO Martin Sweeney said: “Too many retailers are happy to dismiss fraud as a cost of doing business. Downplaying fraud to protect the customer experience is a false dichotomy. Armed with the right tools and intelligence, retailers can build context about every single customer, easily telling fraudsters from legitimate shoppers. That enables them to tackle the fraudsters in the right way and ensure good customers get the great online shopping experiences they deserve.”
The decision not to fully address fraud impacts revenue and threatens long-term sustainability. For the first time, revenue overtook growth as the business metric most affected by fraud, with over half (52 per cent) of merchants saying it has directly impacted their bottom line in the past year.
Balancing security measures with customer experience is considered critical for responders going forward. 50 per cent say they’d prefer a balanced approach, but 42 per cent still opt to take a harder line and block more customers, even if that means good customers face additional hurdles in completing their purchase.
Looking at fraud globally, overall, Canadian merchants report the most significant increase in fraud, at 28 per cent, and in the UK, it’s 14 per cent.
Sweeney concludes, “With the financial and reputational stakes rising, the message is clear: fraud is no longer a side issue – it’s a core business risk. Now, merchants can have robust fraud controls that protect themselves and their honest customers. They can deliver great customer experiences, all while clawing back lost revenues.”
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