Growing Fraud Cases in Online Retail: A Challenge for Companies and Investors

Rise of Fraudulent Activities in Online Retail

The global online retail sector faces a growing challenge: A recent analysis by US cybersecurity provider LexisNexis Risk Solutions reveals that the number of fraudulent customers is steadily increasing. This situation is exacerbated by ongoing economic uncertainty and the activities of organized crime.

International gangs are specifically recruiting individuals to commit fraud during online shopping or to provide their identities for criminal purposes. LexisNexis operates a "Digital Identity Network" used to verify online identities and purchases. The foundation of the analysis was based on 116 billion transactions from the past year.

Fraud Statistics and Their Impact

According to the study's findings, genuine customers accounted for 38.8 percent of all fraud cases worldwide in 2025, representing an increase of nearly two percentage points compared to the previous year. In Europe, the share of these so-called "first-party fraud cases" is nearly 52 percent. These figures highlight that online retail is not only growing but is also increasingly affected by fraudulent activities.

Jason Lane-Sellers, a cyber fraud expert at LexisNexis, states: "The economic crisis drives some people to seek fraudulent opportunities." Particularly vulnerable groups include individuals with poor credit ratings or students, who often unknowingly get involved in fraud schemes. The perpetrators offer them financial incentives to provide their data.

Impact on the German Online Retail Sector

This issue also affects the German online retail sector. A spokesperson for the e-commerce association BEVH confirms the alarming trends, emphasizing that especially students and retirees are being recruited for fraud schemes. Many of these individuals are unaware that they are becoming part of a fraud plan, seeing only an enticing money offer.

Bernd Ohlmann, spokesperson for the Bavarian Trade Association (HBE), describes online fraud as a growing and significant problem. "Online retail is booming and continues to grow this year. There are some who want to take a piece of the pie, and not just in legal ways," he warns.

Fraud Schemes and Their Consequences

A common method involves not paying for goods delivered on credit or claiming they were not ordered. Lane-Sellers describes scenarios where customers order the latest sports shoes and claim the goods never arrived or that they never ordered them. These practices also impact the financial sector, which attracts customers with attractive credit offers.

"It is now possible to order expensive mobile phones with a two-year credit contract without a down payment," says Lane-Sellers. Financial service providers see the greatest challenges in areas like "Buy now pay later" offers and traditional credit contracts. The burden of proof often lies with the merchant, complicating the situation further.

The Role of Technology in Fraud Prevention

However, the increase in fraud cases by genuine customers does not mean that identity theft or the criminal takeover of online accounts is declining. LexisNexis reports that gangs are increasingly targeting desktop computers. However, companies could gain valuable signals and data through the use of mobile apps that could help improve security profiles for fraud detection.

Lane-Sellers concludes that many customers mistakenly believe that traditional desktop computers are safer for high-value transactions than mobile devices. This misconception could pose new challenges for both companies and investors that need to be addressed to secure shareholder value in the long term.