Ecommpay report says eCommerce fraud needs overhaul

Ecommpay has published a report on eCommerce fraud that identifies three weaknesses in current fraud prevention across the sector.

According to the payments company, the study argues that fraud prevention can create competitive disadvantage and market distortion, that existing technology and regulation are not designed to address human vulnerability, and that regulatory frameworks contain conflicts that cannot be resolved at the institutional level.

The document, titled Beyond the Black Box: Why human-centric fraud demands ecosystem-wide transformation, focuses on businesses that depend on eCommerce, including merchants and fintech groups. Drawing on interviews with fraud, compliance and regulation specialists, it examines how fraud has shifted from technical exploitation towards the manipulation of consumers and staff.

The report argues that the industry response has not kept pace. Regulation and fraud controls remain focused on technical systems and institutional structures, even as social engineering and other forms of human manipulation have become a more prominent route for attackers.

According to the report, that mismatch leaves merchants exposed and can distort competition by placing uneven burdens on businesses trying to prevent losses. Ecommpay is calling for broader co-operation between merchants, fintech firms, regulators, government and industry bodies.

Willem Wellinghoff, Chief Compliance Officer and UK Chair of Ecommpay, said fraud is rising in scale and cost. “Fraud is an increasing threat, with the number of cases and the financial losses growing year-on-year,” he said. “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.”

Merchant Steps

Alongside its wider critique of the current system, Ecommpay set out actions for merchants. These include discussing fraud prevention with payment providers, auditing internal systems, educating customers about fraud risks, training staff to spot attempted fraud, monitoring changes in fraud patterns, tracking unauthorised use of brands and reporting suspicious transactions to payment service providers.

The guidance reflects a practical message running through the report: while structural change across the sector may take time, businesses can review their own controls and processes now. Fraud prevention, it argues, should not be treated as a one-off compliance task but as an ongoing process that responds to changing criminal tactics.

Wellinghoff said merchants should start with their own systems and provider relationships. “While significant, lasting, global change will depend on some big changes to how the industry works together and is regulated, there are steps eCommerce merchants can take today that will help to protect them and their customers. Discussing fraud prevention with payment providers and taking a detailed look at internal systems is the best place to start, to quickly identify weaknesses and opportunities for improvements. However, this is not a one-off tick-box exercise; effective fraud prevention requires ongoing monitoring and knowledge of the rapidly evolving landscape as well as continual development of internal solutions and processes to meet changing demand,” he said.

Wider Pressure

The report comes as online merchants face sustained pressure from fraud losses, chargebacks and tighter scrutiny over customer protection. Across digital commerce, companies have been investing in identity checks, transaction monitoring and behavioural analysis, but the growth of scams that rely on persuasion rather than direct system compromise has complicated those efforts.

Ecommpay also argues that no single part of the market can solve the problem alone. That reflects a wider debate in payments and online retail over where responsibility for fraud prevention should sit, particularly when consumers, merchants, payment providers and regulators each control different parts of the transaction chain.

The London-based company, founded in 2012, provides payment processing and acquiring services to businesses operating across multiple markets. It says its fraud tools are designed to help merchants and customers detect and stop criminal activity, but the report argues that tools alone will not address the deeper weaknesses identified in the study.

Its core message is that fraud prevention needs a broader rethink centred on human behaviour, incentives and co-ordination across the eCommerce system, rather than a narrower focus on technical controls and isolated institutional responses.