Online shopping keeps growing and so does fraud. About 85% of U.S. shoppers worry about scams and roughly a third have already been victims.
We’re not just talking about small scams, either. Online fraud is fast, sophisticated, and expensive. Digital payments make it easy for criminals to steal card details, take over accounts, and quietly erode the trust your business has built.
If your store lacks strong fraud protection, you’re going to face higher chargebacks, more operational headaches, and possibly fines from payment providers or regulators. Rising digital sales and contactless payments create new opportunities for fraud, and criminals will probe checkout flows, exploit onboarding gaps, and even target marketing campaigns.
Modern fraud protection isn’t just about blocking bad actors. You also need to protect revenue and keep customers happy while making their experience smooth from start to finish.
Fraud doesn’t stand still and as soon as you think you’re secure, criminals adapt, finding the tiniest gaps in authentication, checkout, or monitoring. You’ll need a strategy that moves as fast as your business and responds in real time.
What is eCommerce fraud and how does it happen?
ECommerce fraud happens when criminals try to steal money, sensitive information, or both online. They target weaknesses in digital payment systems, exploiting poor security on the back end or gaps in the customer-facing checkout process. Their goal is often twofold: gain unauthorized access to funds and harvest customer data that can be used for further scams.
At its core, eCommerce fraud is about breaking trust. Online transactions rely on assumptions: that buyers are who they say they are, that payment credentials are valid, and that accounts haven’t been compromised. Without strong protections, those assumptions can be abused, giving fraudsters the chance to manipulate transactions, access customer data, and harm your business.
Unlike traditional retail fraud, which is often stopped quickly in person, eCommerce fraud is remote, data-driven, and harder to detect. Someone can hijack a legitimate account, exploit weak password habits, or manipulate checkout flows without ever physically interacting with your store.
That’s why you’ll need tools that track digital behaviors, monitor device data, and flag unusual patterns in real time. Fraud can happen anywhere in the customer journey—from sign-up and checkout to refunds and promotions—and it often happens as part of larger, coordinated attacks.
Your fraud strategy needs to be systemic. You can’t treat it like an isolated risk at checkout only. Every transaction, every user account, and every payment flow can be a potential entry point for fraud. Viewing eCommerce fraud as a systemic threat helps you design protections that cover the entire customer and merchant ecosystem.
How does eCommerce fraud impact your business?
Fraud isn’t just about losing a single transaction. Over time, it can erode profits, overwhelm teams, and expose sensitive data. Direct financial losses are only part of the picture. Fraud also increases operational overhead. Your teams will spend hours investigating suspicious transactions, managing customer disputes, and paying fees imposed by payment providers and card networks.
Manual reviews quickly become unsustainable as transaction volumes grow. The more your business scales, the more time and money you’ll need to dedicate to fraud prevention unless you automate or optimize processes.
Fraud also affects critical business metrics. Higher fraud rates lead to more chargebacks, reduced authorization rates, and stricter oversight from banks. Marketing performance can suffer, too. Promotion abuse, incentive fraud, and click fraud distort metrics, making it harder to measure ROI on campaigns or optimize customer acquisition spend.
Customer trust is another high-stakes factor. Fraud affects the experience your customers have on your site. If your controls are too strict, they’ll face false declines and friction, hurting conversions and loyalty. If your protections are too weak, you’ll suffer repeated losses and dissatisfied customers. You’ll need to find the right balance, using intelligent tools that safeguard revenue without sacrificing the user experience.
Ultimately, fraud can ripple through every part of your business—from finance to customer support, marketing, and product teams. Addressing it proactively is the only way to maintain healthy operations and ensure long-term growth.
What are the most common types of eCommerce fraud?
Fraud comes in many forms, each presenting unique challenges depending on your business model, customer base, and transaction volume.
- Card-not-present (CNP) fraud occurs when stolen payment credentials are used to complete online transactions. Without a physical card to check, you’ll need to rely on digital signals like device data, geolocation, and behavioral patterns to confirm legitimacy. Fraudsters exploit this gap, knowing that digital fraud detection is more complex and error-prone than in-person verification.
- Account takeover is a major threat for platforms with registered users or stored payment information. Fraudsters gain access to legitimate accounts, operate under trusted identities, and make fraudulent activity harder to distinguish from real customer behavior. Marketplaces face an additional risk: compromised merchant accounts can be used to divert funds, manipulate listings, or further facilitate fraud.
- Refund and returns abuse is another common scam. Fraudsters exploit return policies to get free products or services. Returns fraud forces merchants to absorb losses while managing disputes that might look legitimate at first glance. High-volume sellers face significant operational strain from these cases.
- Promotion and incentive abuse targets discounts, sign-up bonuses, and loyalty rewards. Fraudsters extract value without genuine purchasing intent, undermining marketing efficiency and skewing the data that drives critical business decisions. You’ll need strategies to prevent abuse while still offering legitimate incentives to real customers.
Fraud doesn’t have to occur in isolation. Often, one type leads to another, creating chains of attacks that can escalate quickly. Effective eCommerce fraud protection identifies patterns across multiple types of fraud, giving you a more complete defense.
How can you protect your eCommerce business from fraud?
Protecting your store starts with a layered approach. You’ll need to map fraud and risk across the entire customer journey and identify high-risk points like account creation, checkout, and refunds. Understanding where you’re most exposed lets you place intelligent controls that deliver the most value over time.
Transaction monitoring is critical. Moving beyond static rules, you’ll need to use real-time data and behavioral patterns to detect emerging threats. This approach adapts as fraud tactics evolve while keeping legitimate customers’ experience smooth. Marketplaces should apply the same approach to seller onboarding and payouts. Continuous monitoring is as important as initial verification to catch suspicious activity early.
Automation is key for scaling. AI-powered approvals allow your teams to focus on edge cases and complex fraud investigations instead of routine transactions. Regular reviews and refinements ensure your controls stay aligned with changing risk profiles. Fraud prevention shouldn’t operate in a silo. You’ll need collaboration between payments, operations, and customer support teams to share insights, track dispute outcomes, and identify friction points that could expose vulnerabilities.
You’ll also need to educate your team and your customers. Encourage best practices like strong passwords and two-factor authentication. Monitor for unusual behaviors and patterns, such as repeated failed logins or multiple transactions from a new device. Combining technology, process, and human insight gives you the best chance to stop fraud before it happens.
What is the real cost of eCommerce fraud?
Fraud costs go far beyond lost transactions. Chargebacks, processing fees, and internal investigation efforts eat into your margins. Overly strict rules reduce conversions, while weak controls leave you exposed to repeat attacks. Both scenarios hurt your bottom line.
You’ll need optimized fraud protection to grow confidently. Predicting and controlling risk allows you to invest in expansion, enter new markets, and protect revenue without slowing legitimate customers. When you prevent fraud effectively, you protect your profitability, scalability, and long-term business value.
How does Spreedly help businesses fight eCommerce fraud?
Spreedly helps merchants turn fraud strategies into operational reality. Tools like Protect and our acquisition of Dodgeball embed intelligent risk controls directly into payment flows and unify fraud decisioning across your ecosystem.
Protect works inside the payment lifecycle. Fraud checks and authentication, like 3DS, get applied before a transaction reaches the processor. This reduces unnecessary declines, limits exposure to high-risk activity, and ensures a smooth checkout experience for your customers.
Dodgeball enables orchestration across multiple fraud tools. Conditional checks and AI-assisted signals let your teams make real-time, risk-aware decisions. You’ll spend less time on false positives and more time on complex cases, scaling protections as threats evolve.
Together, Protect and Dodgeball provide a multi-layered defense across payment processing and fraud decisioning. They protect revenue, simplify compliance, and boost operational efficiency while maintaining a seamless experience for your customers.
With these tools, you’ll get actionable insights across your payment flows, monitor seller and buyer activity, and ensure compliance with regulations like PSD2 and SCA. You’ll reduce false positives, lower chargebacks, and maintain higher authorization rates, all without disrupting your customer experience.
Why eCommerce fraud protection is an ongoing investment
Fraud protection isn’t a one-time setup—it’s an ongoing strategy. Spreedly provides continuous optimization and flexible defenses against evolving threats. You’ll reduce losses today while preparing your business for smarter, growth-focused fraud prevention tomorrow. Protecting your revenue, your teams, and your customers requires ongoing attention, strategy, and investment.
When done right, eCommerce fraud protection becomes a growth enabler. You’ll increase trust with customers, safeguard operational efficiency, and ensure your revenue scales as your business grows. Start treating fraud prevention as an integral part of your business strategy, not an afterthought.
With Spreedly, you’ll be ready to stay ahead of fraudsters while building a more secure and scalable online business.
