The dark side of the boom – the rise of ecommerce consumer fraud
- Consumer fraud is growing rapidly in Germany, with 36% of online shoppers drawn in, according to extensive new research from Ravelin
- Financially stretched middle-aged people are the most actively involved (39%)
- Ravelin’s report, “The dark side of online shopping – the rise of friendly fraud”, summarising the research, can be viewed and downloaded here
Over a third of Internet shoppers in Germany have committed online fraud within the last 12 months.
This is one of the central findings of new research commissioned by fraud prevention provider Ravelin, exploring the attitudes, motivations, values, and backgrounds of a growing number of consumers who are turning to ecommerce crime.
Ravelin polled over 6,000 adults across Germany, France and the UK, (2000 in each country) and found that vast numbers of consumers of all ages regularly commit fraud. The survey found 36% of online shoppers in Germany admitted to returning items after use, taking advantage of promotions, and abusing returns policies. In France the figure rises to almost half (47%) and in the UK it is 39%.
Surprisingly, the over-45s are the worst offenders. 39% of respondents who committed fraud in the last year were from this age group, compared to 17% of 18–24-year-olds, 25% of 25–34-year-olds and 20% of 35–44-year-olds.
The cost of living crisis and general sandwich-generation pressures may be driving this behaviour. This refers to people looking after their own children and older parents.
Attitudes to fraud
According to the survey 36% say they see nothing wrong with taking advantage of loopholes, gaps in returns policies, and other terms and conditions.
More than a quarter (27%) also believe this type of behaviour is a victimless crime committed against brands that over-inflate prices (18%)
Financial gains
Fraud seems to pay for many. Acting dishonestly has helped 20% of those who have committed fraud gain over €500 in the last year, while 37% say they have gained €100 or more.
Almost a third (31%) of people who have committed fraud in the last year believe their monetary benefit outweighs the company’s monetary loss.
In addition to those actively involved in consumer fraud, many more are tempted, or tempted again: 32% of respondents have considered committing fraudulent activities in the future.
Consumers are finding different ways to commit fraud and play the system. Mostly, they game policies by attempting to take advantage of promotions, returns or refunds so they get more than they should without paying. A small number are pushing into second-party payment fraud, making online purchases using someone else’s card details without permission (the chart below outlines German online shoppers’ attitudes to consumer fraud).
Impact on businesses
The rise in consumer fraud is having a major financial impact on ecommerce across Europe. By 2025, fraud will cost merchants in excess of $48/£39 million, and this figure is set to keep rising.
This type of fraudulent activity often peaks when consumers are spending most, meaning merchants must be extra vigilant during sales and seasonal retail pushes such as a Black Friday.
Ravelin CEO Martin Sweeney said: “Merchants are aware they have a problem with their own customers committing fraud, but the scale to which this is happening has not been clear until now.
“We live in difficult times, so it is perhaps not surprising that some consumers find themselves tempted into fraudulent behaviour, but the fact that so many otherwise respectable middle-aged people are involved seems quite significant.
“Merchants must be more vigilant and alert to all sources of fraud. And the best way to achieve this is to have a deeper data-led understanding of your business powered by automation. Retailers and ecommerce merchants need to balance the need to clamp down on fraud with offering customers an easy and safe shopping experience. The right automation can help merchants strike the right balance for their business.”
Triggers
People have different motivations for committing fraud, from socio-economic to life events, according to the research. 37% of respondents in Germany agree that the cost of living crisis triggered their fraudulent activity. This number rises to 65% in the UK, where consumers have been hit hardest, and 55% in France.
Other triggers cited include the Covid-19 pandemic (32%) unemployment (19%), having children (13%) and starting school or university (18%).
More men (55%) than women (44%) say they would consider committing fraud in the future.
Survey respondents say that once they get involved in customer fraud, they find it hard to stop. Almost a third (31%) admit they commit fraud as often, if not more, than in previous years.
Heavy shoppers are heavy fraudsters. 61% of those who admit to committing fraud more than four times, have shopped online more than 11 times in the last year.
A majority of those surveyed find it easy to get away with committing fraud, which suggests merchants are not doing enough to protect themselves or deter consumers from being drawn into fraud.
Ravelin’s report, “The dark side of online shopping – the rise of friendly fraud”, summarising the research, can be viewed and downloaded here.
Notes to editors
Triggers for consumer fraud (source: Ravelin consumer fraud survey, 2023)
All countries | Germany | UK | France | ||
The cost of living crisis | 51% | 37% | 65% | 55% | |
Covid-19 pandemic | 29% | 32% | 29% | 26% | |
When I was made unemployed | 18% | 19% | 18% | 16% | |
When I had children | 15% | 13% | 19% | 15% | |
When I started school or started university | 15% | 18% | 10% | 15% | |
Other | 9% | 9% | 9% | 10% | |
Don’t know | 4% | 7% | 2% | 3% | |
Prefer not to say | 2% | 3% | 3% | 0% |
Examples of consumer fraud |
● Item not received fraud: Falsely claiming ordered goods never arrived. The customer might then request a refund or a new item to be shipped and then could resell the extra goods or keep them.
● Faulty or damaged item: A customer can put through a chargeback request with their bank or a refund request with the merchant, misrepresenting the condition or state of the items upon arrival. They then request a new item and keep or sell the old one, which in fact was in good working order.
● Wardrobing/free-renting: Buying an item with the intention of returning it after using it once or twice – for example, returning a new dress after wearing it to a wedding.
● Fake returns: Attempting to return different – usually inferior – items to the ones purchased. The merchant will often approve the refund before verifying the parcel’s contents.
Survey methodology
Ravelin commissioned a survey of 6278 adult consumers drawn from the UK (2098 respondents), Germany (2092 respondents) and France (2088 respondents) who have shopped online in the last six months. The survey was designed to gauge people’s propensity for and attitudes about ecommerce consumer fraud.
About Ravelin
Ravelin provides technology and support to help online businesses prevent evolving fraud threats and accept payments with confidence. Combining machine learning, graph networks, behavioural analysis, and expert rules, Ravelin helps businesses draw deeper insights from their customer data to detect fraud, account takeover and promotion abuse, and increase payment acceptance. www.ravelin.com
For more information about Ravelin please contact: laura.smettem@ravelin.com