#74 - Fraud is down. Losses are up. Here's why.

The MRC 2026 Global eCommerce Payments & Fraud Report is 54 pages long.

It contains dozens of charts, hundreds of data points, and comparisons sliced six different ways - by region, by merchant size, by MRC membership, and year-over-year.

What it doesn’t contain much of is interpretation.

Whether that’s intentional or not, it leaves the analysis to you.

Most people read the executive summary and move on.

And one of its highlights? eCom fraud is down across the board for the second year in a row.

But are fraudsters going out of business? Did they repent and retire?

Well, there’s another explanation that hides in the data.

Today I want to try and connect the dots. Maybe you’ll find the picture interesting.

Is eCom fraud in decline?

For the second consecutive year, fraud incidence rates declined across the board and for all fraud vectors.

For an industry that keeps pumping fraud fears, this reality is sobering.

The trend leaders are also quite interesting: 

Real-time payment fraud is down 7 percentage points YoY. Re-shipping fraud dropped from 22% to 15% of merchants reporting it. Lastly, coupon and discount abuse fell from 32% to 25%.

An interesting mix between hardcore 3rd-party fraud, merchant fraud, and some 1st-party fraud vectors.

The direction is clear: eCommerce fraud is becoming less frequent, attack by attack.

Read only this, and you’d feel pretty good about where things are headed.

But here’s where it gets complicated:

Despite fewer incidents, the fraud rate by revenue increased significantly - from 3.2% in 2025 to 3.5% this year. 

Let me rephrase - while fraud incident numbers are down, losses are up by roughly 9%!

What gives?

I have a theory and it’s made of two parts.

Are fraudsters migrating?

GenAI has made deepfakes, synthetic identities, and social engineering cheap and scalable. 

The cost of impersonating a person convincingly - voice, video, fabricated ID documents, you name it - has dropped dramatically over the past two years.

The question is: where does that capability get deployed?

Payment fraud on eCommerce is harder than it’s ever been - 3DS is widespread, fraud vendors cover this category well, and even the merchants themselves have seasoned fraud teams.

This doesn’t make payment fraud impossible. It just destroys the ROI.

But financial institutions present a different story. 

Account fraud, synthetic identity fraud, loan fraud, money mule networks, APP scams - these attack vectors benefit enormously from AI-generated personas and deepfake-powered social engineering. 

And FIs, broadly speaking, are less battle-tested than eCommerce merchants when it comes to these specific vectors.

That doesn’t make it a walk in the park for fraudsters, but it increases ROI.

Now ask yourselves - if you were a business-savvy fraudster, what would the last two years look like for you?

You probably don’t need to think so hard. A recent survey found that 60% of FIs reported an increase in fraud attacks - a perfect mirror image of the eCom state.

What we’re likely seeing is an ever-increasing migration of fraud from eCom to financial services.

Is return fraud getting out of hand?

Fraudsters having a good reason to migrate off eCom is a nice theory, but it doesn’t explain why fraud losses are going up at the same time.

Mathematically speaking, if we see a decline in incident numbers and a parallel uptick in losses, it can only mean one thing - the average loss per incident is spiking.

But what exactly causes this?

The answer, if you connect the dots, is return fraud.

How come? Well, returns fraud - like all other fraud vectors - has seen a decline in incident numbers.

But at the same time, it’s the only fraud vector that is explicitly mentioned in the report to be on the rise.

61% of merchants report an increase in refund and policy abuse. Only 3% say they’ve suffered none at all, down from 7% last year.

64% of merchants report general “First Party Misuse” is increasing this year. Even more interesting, the average resolution cost is up from $74 just two years ago to a current $82.

That’s nearly an 11% rise in loss just there.

And let’s not forget - these aren’t all organized fraud rings. 

A lot of these cases are your customers - or people who look exactly like them. No blocklist catches them cleanly. No rule fires on them without also hurting conversion.

They’re expensive precisely because the toolbox for fighting them is limited and blunt.

The missing smoking gun

Let me be direct: the MRC report doesn’t say any of this. It covers eCommerce merchants - not what’s happening at FIs. And the data has its own internal tensions.

It can definitely be that I forced my preconceived notions of the industry on the data it presented:

That AI-powered fraud is decimating financial services.

That these fraudsters are not beginners, and had to come from somewhere.

That 1st-party fraud is the second-fastest-growing fraud vector of the last few years.

Did the MRC report prove me right? No.

Did it add more fuel to my theories? Absolutely.

What dots connected for you when you read the report? Hit reply - I’d love to hear what you’re tracking.

In the meantime, that’s all for this week.

See you next Saturday.

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