Risk analysts with G2 Risk Solutions (G2RS), who monitor billions of e-commerce webpages globally, have spotted several potentially damaging trends that may impact the payments ecosystem, including banks, payment providers and other e-commerce stakeholders.
Key trends e-commerce risk analysts are watching
Actionable insights on emerging e-commerce risks are crucial for G2RS’ payment provider clients.
With this intelligence, clients are better able to protect against financial, legal and reputational losses.
Six of the risky trends G2RS analysts are monitoring closely include:
The use of generative AI (GenAI) to perpetrate widespread fraud
G2RS analysts report that GenAI is being used to create sophisticated websites that are harder to identify as fraudulent.
In addition, criminals are using GenAI to mass-produce synthetic consumer identities, which they use to apply for illicit merchant accounts – at scale.
Further, G2RS analysts have observed a proliferation of websites offering deepfake adult content creation services. These services violate card network rules and, in some cases, the law.
Tainted nutraceuticals
Tainted products, often containing undeclared pharmaceuticals or banned substances, pose significant risks to consumers – and payment providers.
Sexual enhancement, weight loss and bodybuilding supplements remain the categories most frequently found to contain undeclared ingredients; however, new categories are beginning to emerge.
Regulators have recently issued alerts regarding supplements tainted with toxic yellow oleander, liquid kratom supplements associated with consumer harm, and supplements that contain undeclared corticosteroids.
Payment providers need to take quick action in response to these alerts – or risk card brand assessments.
The evolution of “subscription-based fraud”
In 2024, G2RS saw a significant uptick in illicit merchants enrolling consumers in unauthorised subscriptions using stolen credit cards.
The recurring monthly fees are often low-dollar, making them less likely to be noticed by consumers and allowing bad actors to continue siphoning funds undetected.
Additionally, in 2024, the Federal Trade Commission (FTC) announced its “Click to Cancel” rule to address deceptive practices in subscription services.
The rule, which will go into effect in 2025, is expected to increase card network focus on merchants offering subscription services.
Fake reviews as an industry
Fake reviews, testimonials and likes/follows have become a serious problem in e-commerce, fuelled by the growth of merchants that sell these services.
In 2024, both the US and the UK passed regulations banning the sale of fake reviews, allowing regulators to seek penalties against known violators.
Yet, illegal sales continue to proliferate online. Card brand networks have begun assessing fines and payments providers and online marketplaces face increasing pressure to monitor and prevent fraudulent review activity within their portfolios.
Transaction laundering-as-a-service
Recently, there has been an increase in criminals outsourcing transaction laundering to third parties.
These operations automate and scale the laundering process, leveraging large numbers of shell companies, straw signers and thousands of sophisticated “front” websites to disguise illegal transactions.
Payment providers must implement stronger merchant vetting and monitoring to keep these illicit merchants out of the payments ecosystem and avoid card brand assessments.
“As technology advances, the risks facing the payments and e-commerce ecosystems are evolving at an unprecedented pace,” says Rochelle Blease, President, Merchant Risk Management.
“The industry must take risk-mitigating action against anticipated threats before they fully materialise. Bad actors are leveraging tools and techniques that challenge traditional safeguards, underscoring the need for a proactive, agile approach to risk management.”
“The evolving regulatory environment reflects the growing complexity of risks in payments and e-commerce,” continues Niamh Lewis, Vice President, Compliance Operations.
“Organisations must strike a delicate balance between compliance and innovation, ensuring that efforts to mitigate threats also support trustworthy consumer experiences. Success in this landscape will come to those who view risk management as a strategic enabler rather than a reactive burden.”
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