The alarming growth of online fraud revealed

New research from fraud prevention platform Ravelin shows online fraud is increasing globally but has grown more in the UK in the last 12 months than any of the 10 countries surveyed, including France, Germany, Italy, America, Brazil, Australia, and Mexico.

Ravelin’s Fraud and Payments Survey 2024 reveals a highly challenging business landscape in the UK, with 84% of merchants confirming fraud has increased, followed by Australia (83.4%) and Spain (81.3%). Globally, fraud has increased for 74.8% of businesses in the past 12 months.

One in four of the businesses polled by Ravelin said they lose over US$15 million (£12 million) to fraud every year.

The explosion in online fraud threatens to hamper economic growth. Over half of respondents (51.8%) say fraud is stifling the growth of their company, leading to wider knock-on impacts.

Reputations, revenue and, in turn, stock value are taking a hit as fraudsters adopt new tactics, techniques and technologies to steal from brands.

Martin Sweeney, Ravelin CEO, said: “Online fraud shows no signs of slowing down. The speed of adoption of new tactics and technologies such as artificial intelligence (AI) by fraudsters, both amateur and professional, is happening at breakneck speed. The democratisation of fraud affects us all.”

Fraud trends: what’s powering the growth of global fraud?

AI-powered fraud

According to the Ravelin report, AI fraud is well and truly here, with nearly two-thirds of merchants (63.6%) having seen criminals use AI technology against them (inclusive of large language models (LLMs), machine learning, synthetic IDs and other applications).

Friendly fraud

First-party fraud (also called ‘friendly fraud’) is on the rise in many parts of the world. Topping the list for friendly fraudsters are the UK, Australia and Spain, with up to 54.4% of merchants estimating customers are now more likely to attempt fraud.

Unsurprisingly, many merchants (58.6%) agree they must do more to tackle fraud, but are often prevented from doing so because of budgetary concerns (39.4%), or concerns that it could introduce friction that will cause customers to churn (38.2%) – which is not the case with tech-forward solutions. Another key blocker is a lack of awareness of the benefits from other outside teams (35.9%).

Solutions: how companies are fighting back

Automation in the form of machine learning is widely seen (66.2%) as the most useful implementation of AI for fraud prevention, ahead of LLMs (46%), generative adversarial networks (GANs; 38.7%) and big data analytics (36.8%).

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

The State of New Jersey Department of Banking and Insurance named insurance fraud the second-largest white-collar non-violent crime following tax evasion.