This article is provided by BRC Associate Member, Ravelin.
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Ravelin’s original research published in the latest Global Fraud Trends Report showed that costs associated with ecommerce fraud decreased in the past year from £8.20 million to £6.94 million for the average retailer.
It’s a good sign, signalling stronger controls, greater operational maturity, and wider use of data-led fraud prevention. But retailers also point to a different, growing fraud problem: their own consumers and their creative uses of AI. The line between professional syndicates and abusive customers is blurring.
Our findings reveal that 54% of retailers saw an increase in refund abuse, whilst 46% experienced more promo, voucher, and other policy abuse. In fact, a third (36%) of retailers now view their own customers as a bigger threat to their businesses than criminal fraudsters.
At the same time, AI is turning up the heat, making it easier for shoppers with bad intentions to bend the rules. Over half of merchants we polled say they experienced AI-enabled fraud in the past year, while 68% received AI-generated fake refund evidence.
With consumers and AI increasing the pressure on retailers, it's no surprise that 6 in 10 report an increase in the volume of fraud impacting their business, while 75% predict further increases to the cost of fraud (including both losses to fraud and resources required to stop it).
This will certainly dent revenues. But refund and returns abuse also affects reputation, customer satisfaction, loyalty, and growth.
How fraud and abuse affect your reputation and stock price
When news of fraud hits the headlines, or reports make waves on social media, it can severely damage brand reputation and put other customers off. And that can spiral quickly.
Looking at retail-specific results from Ravelin’s research, 46% say their company has featured in the press or on social media because of fraud in the past year.
With 75% of online retailers agreeing that customers become less loyal as a result of reports of fraud against brands they buy, the reputational damage is all but obvious. When customers see reports of fraud against brands they buy from, they tend to be more wary.
In fact, 78% of retailers believe that customers simply don’t trust brands perceived to have weak fraud protection. Further to this, media or social media coverage of fraud or abuse has caused the stock price to drop for 6 in 10 retailers.
The customer loyalty paradox
The findings we’ve laid out constitute great reasons to be diligent about curbing refund abuse and other fraud, in the hopes of avoiding public scrutiny and protecting bottom lines.
But the truth is rather more complicated: many retailers are hesitant to deny refunds to shoppers for fear of impacting legitimate customers.
In fact, 65% of retailers feel pressured to refund customers even when there’s evidence they’re misrepresenting the condition or quality of items, while 67% of retailers said that they consider customer loyalty and brand reputation more important than stopping fraudulent refunds. Leniency can leave brands more exposed to fraud and abuse and, in turn, to reputational damage from bad press or social stories.
We’ve seen shoppers take to social media to share negative ecommerce experiences like being denied a legitimate refund or promotional discount. We also recently saw well-known UK high-street and online retailers face public criticism for refusing returns or charging for them.
Online retailers seem caught between two reputational risks: if they impose too strict measures, customers may feel punished; if they are too forgiving, they risk being seen as easy targets.
The way through is to get better at telling good customers from bad actors or chancers. With the right tools and intelligence, online retailers can build context around every customer account, drawing on past and present shopper behavior, and data such as lifetime value to confidently know their intentions and apply tailored interventions.
This way, retailers can challenge abuse decisively while ensuring genuine shoppers get the fast, seamless experience that builds good loyalty and great reputation.
Retailers know there is room for improvement, with 64% saying their company should do more to fight fraud. With peak season just around the corner, it’s a great time to leverage AI technology and your own unique data to use to block fraudsters, deter opportunistic customers, win over good shoppers, and maximise profits.
Explore the global trends shaping ecommerce fraud and what they mean for merchants in Ravelin’s Global Fraud Trends 2026 report.
