Reputation on the line around the world – the rise of fraud and the devastating impact on UK e-commerce

The failure to effectively combat online fraud is increasingly damaging the brand reputation and financial performance of thousands of companies around the world, new research shows.

Nearly two-thirds of all e-commerce brands (61%) have been at the center of significant public media storms related to fraud, according to fraud prevention firm Ravelin’s Global Fraud Trends 2024 Survey.

Of those surveyed, 40% (and 41% in the UK) say their brand image has been damaged by fraudulent activity. This varies by sector – 40% of retailers, 36% of travel, 45% of digital goods and 38% of marketplaces.

Overall, fraud has increased for 74.8% of businesses globally, with some regions suffering more than others. The UK saw the biggest increase, at 84%.

The effects of such negative publicity can be devastating for e-commerce brands.

Fraud also negatively impacts stock prices for 20% of larger companies, while respondents said fraud had the biggest negative impact on economic growth, at 51.8%.

One in four people say they lose more than $15m (£12m) a year to fraud, and more than half (51.8%) say fraud is holding back business growth, leading to wider side effects. Customer loyalty also falls for 37% of businesses, further affecting reputation.

Interestingly, 31% (39% in the UK) of respondents surveyed by Ravelin cited concerns about public image as a barrier to combating fraud more effectively. A key concern was adding friction to the customer journey, which impacts loyalty and reputation.

Ravelin CEO Martin Sweeney said: “In a world where all parties are interconnected and where reputations can be destroyed globally in a few clicks, brands need to do more to reduce the risk of fraud.

“A company’s reputation is everything and must be protected as if it were a matter of life and death – and from a business perspective, it is.

“Machine learning is being recognized as a key part of combating fraud without adding complexity and enabling brands to detect issues before they escalate and impact reputation.”

Benefits of AI-based solutions

Automation in the form of machine learning is widely considered (66.2%) to be the most useful AI implementation for fraud prevention, ahead of LLM (46%), generative adversarial networks (GAN) (38.7%), and big data analytics (36.8%).

Overall, two-factor authentication (2FA) – which includes technologies such as 3D Secure and biometric verification – is the most popular fraud prevention tool (54.1%).