Retailers lost £11 billion to payments fraud in 2023

THE UK retail sector lost £11.3 billion to payments fraud last year, figures suggest.

More than a third of UK businesses (35%) fell victim to fraudulent activity, cyber attacks or data leaks over the last 12 months, up 37% on 2022, according to the report for financial technology platform Adyen.

Retail businesses lost an average of £1,394,518 each, the report said.

Luxury fashion retailers lost an average of £2.8m, clothing and accessory businesses £2.6m and health and beauty brands £1.1m.

Many retailers have opted for generous return policies to boose online sales, but they now battle high rates of chargeback fraud, when the cardholder claims they did not authorise the transaction.

Fraud is also impacting shoppers, with 33% of UK consumers becoming a victim of payments fraud over the past year, up from 23% in 2022.

Payment fraud is defined as a fraudster stealing customer details and using them to make an unauthorised purchase.

Consumers who fell victim to payments fraud in 2023 lost an average £311.09, an increase of 16% on the year before.

Adyen chief operating officer Roelant Prins said: “Fraud is a pervasive challenge for retailers, and today’s findings demonstrate how it can significantly impact profits.

“Criminals are deploying more sophisticated methods when they attack businesses, including the application of AI, and it’s therefore critical to invest in the right defence mechanisms to protect the company and customers.

“With technology in place, retailers should be able to recognise genuine customers and spot fraudulent activity.”