E-Commerce Fraud in the U.S.: How Businesses and Customers Can Stay Safe

As online shopping continues to soar in the United States, so does the threat of e-commerce fraud. In 2025, digital convenience has become a double-edged sword—while buying and selling online is faster and easier than ever, it also exposes both consumers and businesses to a growing range of cyber threats.

From stolen credit card details and phishing scams to account takeovers and fake storefronts, the tactics used by fraudsters are becoming more advanced each year. The consequences are equally serious, leading to financial losses, eroded trust, and in some cases, permanent reputational damage.

So how can U.S. e-commerce businesses and customers stay safe in this digital battlefield?

In this article, we'll explore the most common types of e-commerce fraud in the U.S., examine the latest statistics, and provide actionable steps that both retailers and shoppers can take to protect themselves in 2025 and beyond.

The Rise of E-Commerce and Fraud in the U.S.

Online shopping is a $1.5 trillion industry in the U.S. as of 2025, but with this explosive growth comes increased risk. According to the Federal Trade Commission (FTC), Americans reported over $12 billion in losses from online fraud in the past year alone—a number that’s more than tripled since 2020.

Key Stats:

Nearly 1 in 4 online shoppers in the U.S. has encountered some form of e-commerce fraud.
Over 60% of businesses reported fraud-related losses in the past 12 months.
Credit card fraud, chargebacks, and fake returns are among the top concerns for retailers.

This shows that while technology and digital tools have improved the online shopping experience, they’ve also created new vulnerabilities.

Common Types of E-Commerce Fraud in the U.S.

1. Credit Card Fraud

This is the most widespread type of e-commerce fraud. Hackers steal card details through data breaches or phishing attacks, then use the information to make unauthorized purchases.

2. Chargeback Fraud (Friendly Fraud)

In this scenario, a customer makes a legitimate purchase, then later disputes the transaction with their bank—claiming they never received the product or didn’t authorize the payment.

3. Account Takeover (ATO)

Cybercriminals gain access to a customer’s online shopping account—often using stolen login credentials—and make unauthorized purchases or drain loyalty rewards.

4. Phishing Scams

Fake emails or websites trick users into entering personal information. These scams are often disguised as promotions from popular retailers or delivery updates.

5. Fake Online Stores

Fraudsters set up professional-looking e-commerce websites that mimic real brands. They collect payments without ever delivering the products.

6. Refund and Return Abuse

Some fraudsters abuse generous return policies to get refunds without returning items—or return counterfeit products instead of the real ones.

How Fraud Impacts U.S. Businesses

E-commerce fraud affects more than just finances. For businesses, the consequences include:

Revenue loss due to chargebacks and refunds
Damaged brand reputation
Loss of customer trust
Increased operational costs from fraud detection and prevention systems

Additionally, small and mid-sized retailers often suffer more severely since they lack the resources to invest in advanced security systems.

How Customers Can Stay Safe While Shopping Online

Despite the risks, online shopping in the U.S. is here to stay. Thankfully, there are simple but effective ways for consumers to protect themselves:

1. Shop from Trusted Sources

Stick to well-known retailers or marketplaces with verified reviews. Be cautious of unfamiliar websites, especially those offering products at unusually low prices.

2. Check for HTTPS

Always look for the lock symbol and “https” in the URL before entering personal or payment information.

3. Use Strong, Unique Passwords

Avoid using the same password across multiple accounts. Consider using a password manager to generate and store secure credentials.

4. Enable Two-Factor Authentication (2FA)

Most e-commerce platforms now offer 2FA, which adds an extra layer of security by requiring a second code to log in.

5. Beware of Phishing Emails

Never click on suspicious links or open attachments from unknown senders. Legitimate companies won’t ask for sensitive information via email.

6. Use Digital Wallets and Virtual Cards

Tools like Apple Pay, Google Pay, or virtual card numbers from your bank provide an added layer of security by masking your real card details.

7. Monitor Your Bank Statements

Regularly check your transaction history for unfamiliar charges, and report any suspicious activity immediately.

How Businesses Can Combat E-Commerce Fraud

Preventing fraud is a shared responsibility—but businesses need to take the lead. Here’s how U.S. e-commerce companies can protect themselves and their customers:

1. Implement Fraud Detection Software

Modern fraud tools use AI and machine learning to identify suspicious patterns in real time—flagging unusual purchases, mismatched billing and shipping info, or multiple failed logins.

2. Use Address Verification Systems (AVS)

AVS checks whether the billing address entered by the customer matches the one on file with the card issuer—helping to detect stolen card use.

3. Require CVV Codes

Asking for the 3- or 4-digit security code on the back of credit cards helps confirm that the shopper has the physical card.

4. Set Transaction Limits

Putting limits on the value or frequency of transactions can reduce the risk of large-scale fraud.

5. Use 3D Secure Authentication

Systems like Visa Secure, MasterCard SecureCode, or American Express SafeKey add an extra verification step during checkout, making it harder for fraudsters to complete a transaction.

6. Educate Your Customers

Provide tips on your website about safe shopping practices. Send alerts if suspicious activity is detected and offer easy-to-use account recovery tools.

7. Keep Software Updated

Outdated platforms and plugins are easy targets for hackers. Regular updates patch security vulnerabilities and reduce risk.

The Role of Government and Industry Regulators

Organizations like the Federal Trade Commission (FTC) and Better Business Bureau (BBB) play an important role in protecting consumers and regulating e-commerce practices.

The FTC regularly issues alerts about emerging scams and offers educational resources for both shoppers and businesses.

In addition, financial institutions, payment processors, and tech companies are working together to develop safer digital payment systems and fraud prevention tools.

New Technologies Enhancing Security in 2025

In response to evolving threats, several innovative technologies are being adopted across the U.S. e-commerce landscape:

AI-Powered Fraud Prevention

Artificial intelligence can analyze user behavior, location, and transaction patterns to instantly detect unusual activity. This allows businesses to stop fraud before it happens.

Blockchain for Secure Transactions

Some retailers are exploring blockchain technology to create transparent and secure transaction histories that are almost impossible to tamper with.

Biometric Authentication

Face ID, fingerprint scanning, and voice recognition are being integrated into shopping apps, making account access and payment approval more secure.

Red Flags: How to Spot a Fraudulent Online Store

If you're unsure about a website, here are some warning signs:

No physical address or contact information
Too-good-to-be-true pricing
Poor grammar or low-quality design
Limited payment options
No return or refund policy

If in doubt, look up reviews or search the company name with keywords like “scam” or “fraud.”

Real-Life Example: A Growing Threat

In 2024, a fake online electronics store scammed thousands of U.S. customers out of over $10 million. The site used stolen product photos and paid for social media ads to appear legitimate. Customers placed orders, but the products never arrived. By the time the scam was exposed, the fraudsters had disappeared.

This case highlights the need for consumer vigilance and stronger enforcement measures.

Staying Safe in a Digital World

E-commerce fraud in the U.S. is a growing challenge, but it's not an unbeatable one. As technology advances, so do the tools to fight back. With the right mix of education, awareness, and innovation, both businesses and customers can shop and sell online with confidence.

For consumers, it means staying alert and using smart online habits. For businesses, it means investing in robust security measures and creating a trustworthy shopping environment.

As the future of e-commerce becomes increasingly mobile, fast, and global, protecting digital trust will be more important than ever. Let’s work together to ensure a safe and seamless shopping experience for everyone.