Retail and e-commerce leaders are being warned that fraud is evolving beyond traditional technical attacks, with new research highlighting a growing reliance on human manipulation and a widening gap in how the industry responds.
A report from payments platform Ecommpay, Beyond the Black Box, identifies three critical weaknesses in current fraud prevention strategies: market distortion caused by existing controls, a failure to address human vulnerabilities, and structural conflicts within regulatory frameworks.
For merchants, the findings reflect a significant shift in the threat landscape. Fraudsters are increasingly targeting customers and employees through social engineering, account takeover and brand impersonation, rather than exploiting system vulnerabilities alone. However, many prevention tools and regulatory approaches remain focused on technical detection, limiting their effectiveness.
The report argues that this misalignment is not only increasing fraud risk but also creating competitive disadvantage, as businesses face rising costs and operational complexity in attempting to manage threats independently.
For e-commerce and payments leaders, the implications are immediate. Fraud losses continue to rise, while the customer experience is also at risk. Overly aggressive controls can introduce friction at checkout, while insufficient protection exposes both revenue and brand trust.
Ecommpay is calling for a more coordinated, ecosystem-wide response involving merchants, payment service providers, fintechs and regulators. Greater collaboration is seen as essential to addressing systemic weaknesses and keeping pace with increasingly sophisticated fraud tactics.
Alongside this, the report highlights practical steps organisations can take now. These include working more closely with payment providers, conducting regular internal audits, training staff to identify fraud attempts and monitoring for unauthorised use of brand assets online.
Customer education is also emerging as a critical defence layer, reflecting the role consumers now play in preventing (or inadvertently enabling) fraud.
“Fraud is an increasing threat, with the number of cases and the financial losses growing year-on-year,” said Willem Wellinghoff, Chief Compliance Officer and UK Chair of Ecommpay. “The challenge is that the methods criminals employ to defraud consumers and businesses continue to evolve, and regulation and technology struggle to maintain pace or get ahead. More needs to be done to bring about real, meaningful change.”
