Recently, Juniper Research released a study that found that digital goods fraud may cost ecommerce merchants $27 billion globally by 2030. Not only that, but research found that the transactional volume of fraudulent digital goods is outpacing physical goods fraud.
The report highlights key drivers like synthetic identity use, friendly fraud, promo abuse, and AI, and goes over how this fraud is redefining risk in ecommerce.
The Key Drivers Behind the Surge of Digital Goods Fraud
The study by Juniper Research has revealed that the prevalence of digital goods fraud is increasing and that it will cost ecommerce merchants $27 billion by 2030. This is a 162% jump from the 2025 base of $10.4 billion, and the report has also revealed that the value of digital goods fraud is outpacing physical goods fraud.
According to the report, the key drivers behind this growth in digital goods fraud include:
- Synthetic identity use, which is when fraudsters create a fake identity that’s a mix of real and false information to use to commit fraud.
- Friendly fraud, also known as chargeback fraud, is when a customer disputes a legitimate charge as fraudulent, which often leads a business to lose the revenue from the sale and potentially even pay a chargeback fee.
- Promo abuse, which is when someone fraudulently uses a company’s promotional offers or deals, like coupons, sign-up bonuses, or referral discounts. This is often done by creating multiple accounts with fake or stolen identities.
Speaking about the results of this study, Shane O’Sullivan, a research analyst for Juniper Research, also said that “Mobile-first purchasing, gaming, streaming, and apps are widening the attack surface for fraudsters. Instant delivery provides a near-zero intervention time, meaning traditional fraud tools struggle to detect and block fraud before fulfilment. The rise of synthetic identity fraud and credential-stuffing attacks are also enabling far more sophisticated, high-impact risks.”
AI Acceleration
But in addition to these drivers, AI is also playing a major role in speeding up this type of fraud. Fraudsters can use AI to help scale scams and pull off fraud that wouldn’t have been possible in the past without using AI. For example, they may be able to use AI to automate the process of creating fraudulent accounts or launching huge phishing campaigns without spending a lot of time and effort.
There are several other ways that scammers can enlist the help of AI to commit ecommerce fraud, as well, including:
- Using AI to create incredibly realistic impersonations, or deepfakes. These let scammers use convincing video, audio, or photos to mimic specific individuals and trick others.
- Using AI to craft highly personalized and grammatically correct emails, texts, or messages for phishing purposes.
- Using AI to generate fake, yet convincing, documents to open new accounts, verify an identity, or participate in a variety of other fraudulent schemes.
So while AI is often used by companies to fight back against this fraud, scammers are also using the same technology to make their online scams, phishing campaigns, and fraud attempts more sophisticated and advanced than ever before.
Changing Risk in Ecommerce as We Know It
The existence of AI in digital fraud is shifting how ecommerce companies defend against it, as well. Traditionally, companies would often look for “red flags” about an account or transaction that point to it being fraudulent in nature. This may be:
- The location of the transaction
- Inconsistent online behavior
- Verification issues
- Higher volume of transactions than normal
- Purchases that are much larger than usual
- Shipping and billing addresses don’t match
However, much of the digital goods fraud taking place today is done from accounts that seem legitimate and from users who aren’t seemingly behaving in a malicious way. The accounts are often authorized, use valid payment methods, and come from devices that seem clean.
AI-driven spoofing has gotten very advanced, and credentials are consistently being leaked, hacked, or sold, so oftentimes fraud appears like genuine customer purchases. As a result, many brands may never catch the fraud at all, or if they do, it won’t be until the order is fulfilled.
Also, with many orders being shipped and delivered within hours, not days, there’s nearly zero intervention time for companies to identify and prevent fraudulent transactions, so many traditional tools and strategies just won’t cut it.
Many of these relied on reviewing transactions after the fact, which isn’t good enough anymore, as companies need to be proactive about identifying and stopping scams, not reactive.
In response to this type of new and sophisticated fraud, ecommerce brands need to be aware of the different strategies to use to protect themselves. This includes:
- Using behavior biometrics to ensure that not only are credentials accurate and legitimate, but also typing speed and patterns, mouse movement, and other aspects of an account’s regular behavior.
- Incorporating advanced AI fraud detection models to monitor transactions in real-time, detect cross-merchant reputation, use fraud scoring, model intent, and more.
- Using stronger verification before a purchase can be made, such as multi-factor authentication, biometric authentication, requiring card security codes, or having an address verification system (AVS) in place.
To learn more about how to fight back against ecommerce fraud and get a more comprehensive look at ecommerce fraud in general, check out our guide for more information.
