Brands Sacrifice Profit for Customer Loyalty – and Are Paying the Price as Fraud Surges
A new global report from Ravelin reveals millions lost to fraud amid rising fraud and reluctance to act.
Online retailers are losing millions to fraud each year, and many are making the problem worse by prioritising customer loyalty over meaningful fraud prevention.
This is one of the key findings from Ravelin’s annual Global Fraud Survey 2025, which paints a picture of escalating fraud and widespread hesitation to act.
The imbalance in approach means the issues companies are experiencing with fraud, particularly refund abuse, are worsening. Based on a survey of hundreds of leading global e-commerce merchants, 77% saw a year-on-year rise in fraud, and most believed that consumers pose as much of a threat as professional fraudsters.
Over half (54%) of merchants say refund abuse has increased while 55% agree it will continue to rise in the next year. 43% receive refund requests on more than 5% of their sales and 9 in 10 say seamless refunds are important to their business model.
The average business is now losing $10.6 million (£8,183 million) annually to fraud. Retail and travel are the most impacted sectors, with both showing an annual average loss of $11 million to fraud.
Despite the financial hit, 66% of merchants consider customer loyalty and brand reputation more important than stopping refund abuse. 38% of responders cited friction and customer churn as the biggest obstacles to efficient fraud prevention.
Yet, when done correctly, fraud prevention actually improves customer experiences. Good fraud prevention does not equal friction for most shoppers.
Ravelin CEO Martin Sweeney said: “Too many retailers are happy to dismiss fraud as a cost of doing business. Downplaying fraud to protect the customer experience is a false dichotomy. Armed with the right tools and intelligence, retailers can build context about every single customer, easily telling fraudsters from legitimate shoppers. That enables them to tackle the fraudsters in the right way and ensure good customers get the great online shopping experiences they deserve.”
The decision not to fully address fraud impacts revenue and threatens long-term sustainability. For the first time, revenue overtook growth as the business metric most affected by fraud, with over half (52%) of merchants saying it has directly impacted their bottom line in the past year.
Balancing security measures with customer experience is considered critical for responders going forward. 50% say they’d prefer a balanced approach, but 42% still opt to take a harder line and block more customers, even if that means good customers face additional hurdles in completing their purchase.
Looking at fraud globally, overall, Canadian merchants report the most significant increase in fraud, at 28%, and in the UK, it’s 14%.
Sweeney concludes, “With the financial and reputational stakes rising, the message is clear: fraud is no longer a side issue – it’s a core business risk. Now, merchants can have robust fraud controls that protect themselves and their honest customers. They can deliver great customer experiences, all while clawing back lost revenues.”
Ravelin’s machine learning platform is designed to help merchants manage this complexity at scale by reducing false positives, uncovering suspicious behaviour and balancing fraud detection with a frictionless customer experience.
