The State of Fraud and Returns 2025
Navigating the Evolving Landscape of Ecommerce Risk
The ecommerce fraud landscape is constantly shifting and fraudsters are constantly innovating. As a result, fraud pressure increased 13% by value in 2025, according to Signifyd data.
This report offers insights into the latest fraud schemes and protection. We look at the latest in return fraud, agentic commerce and explore regional trends in North America, the UK, Europe and Latin America.
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Tackling the Returns Challenge
Online returns are a colossal, $890 billion problem. Signifyd data shows abusive returns soaring, up 64% in May 2025 compared to January 2024, with the overall percentage of abusive returns nearly doubling.
However, returns are no longer just a cost of doing business. In fact, retailers need to stop thinking of returns as a cost and instead consider them a powerful competitive advantage. 65% of respondents in a Signifyd U.S. survey said they’d stop buying from a merchant based on a bad return experience. And 62% said they’d buy more from a brand based on a good return experience.
SOARING UP TO
But as the importance of returns to the customer experience, customer lifetime value and profitability has increased, so has the devious ingenuity of those looking to game the system. Some of the old standbys are still flourishing:
Rock in a box
Fraudsters return a worthless item, like a rock or a broken product, approximating the original weight to get a refund before the deception is discovered.
address manipulation
Scammers alter return labels to send empty or “rock in a box” packages to a nearby business, ensuring the package scans as “returned” but never reaches the retailer, allowing them to keep the refund and original product.
keep the product
Customers purchase items, intending to claim a defect (e.g., a leaking laptop battery) to receive a refund without being required to return the product.
free second item
Fraudsters buy bulky items and claim damage (e.g., a snapped couch leg) to receive a refund or a replacement without returning the original, often getting a second item for free.
Forrester’s Sucharita Kodali on How Retailers Can Tackle the Returns Dilemma
providing generous return policies without
getting fleeced
— Sucharita Kodali, VP & Retail Analyst, Forrester
Abusive returns index (Indexed to January 2024)
Share of returns deemed abusive in January 2024
Share of returns deemed abusive in MAY 2025
When someone comes in to return something, we believe the future gold standard for that experience is that if you are a good person, you should get your money back instantly.
— Raj Ramanand, Co-Founder & CEO, Signifyd
The Rise of Card Testing Attacks
Card testing, a foundational piece of criminal fraud rings, has flourished, increasing 65% between Q2 2024 and Q2 2025. While historically focused on low-value transactions, fraudsters are now testing more expensive, resalable items for a “win-win”. This shift means merchants must spot activity sooner and employ advanced solutions.
Merchants who haven’t already can shift their fraud protection to pre-authorization footing. That means fraudulent orders are weeded out before moving on to the issuing bank for authorization.
Conducting fraud review before the bank authorization stage minimizes the damage of a carding attack by identifying the trouble before the flurry of bad transactions is sent to the issuing bank. Orders that make it to the bank result in a processing fee — minor on its own, but when it’s part of an attack consisting of thousands of transactions, the fees add up to real pain.
Fraud Rings Driving Significant Growth in Card Testing
Year-over-year increase in card testing
Of card testing linked to fraud rings happened between Q2 2024 and Q2 2025
Tariffs, Economy and Fraud
Global trade policies and economic shifts create prime opportunities for fraudsters. The ending of the “de minimis” loophole, allowing duty-free imports under $800, is expected to increase consumer disputes and chargebacks due to customs delays.
In fact, 55% of U.S. merchants anticipate an increase in non-fraud chargebacks due to new tariffs.
Furthermore, economic pressure directly correlates with an increase in first-party fraud. During the pandemic, 33% of consumers admitted to making false claims for refunds. Rising prices due to tariffs could also motivate consumers to engage in first-party abuse.
of U.S. merchants expect more non-fraud chargebacks as a result of new tariffs
of consumers faked refunds during the pandemic
First-Party vs. Payments Fraud: What Merchants Need to Know
the economy’s role
in increasing first-party fraud
— Catherine Tong, co-founding partner, Allyiz
agentic commerce:
The Good Bot vs. Bad Bot Era
The rise of “agentic commerce,” where AI bots shop and make purchases on behalf of consumers, is transforming the retail industry. While offering incredible convenience, it creates new blind spots for fraud prevention and brings challenges like:
Visibility gaps
It’s harder to pinpoint where fraud occurs—on the agent’s platform or the merchant’s.
Increased chargebacks
Bot-Takeover (BTO) attacks
Taking control of AI shopping agents will become a new standard for fraud, enabling rapid and large-scale fraudulent purchases.
Phishing/impersonation
Fraudsters will exploit agentic interfaces for social engineering attacks, exposing user credentials.
Higher returns
Inaccurate information from bots or external sources may lead to disappointment and increased return requests, including abusive ones.
Model drift
New shopping patterns (odd hours, high velocity) mean fraud models need re-training to distinguish human from bot traffic, risking more false positives/negatives.
Mind shift
Fraud professionals must learn to differentiate between legitimate and malicious bot traffic.
Speed and scaleAgentic automation enables fraudsters to execute schemes with unprecedented speed and scale.
From Slumps to Spikes: Bot Attack Fraud Pressure on the Rise
Bot attack fraud pressure — year-over-year change
more bot attack fraud pressure was recorded in January 2025 compared to January 2024
2025 edition
Fraud trends in latam
Get expert insights – complete the form to download the LATAM report.
Get expert insights – complete the form to download the report.
LATAM fraud trends and AI solutions
— Fabio Scopeta, chief product & technology officer, EBAN
State of Fraud and Returns 2025
Discover the critical ecommerce fraud trends shaping 2025, from the surge in returns and card testing attacks to the industrialization of fraud and the impact of agentic commerce.
Get expert insights – complete the form to download the report.
