UK retail faces a new fraud frontier in 2025

The British e-commerce sector enters 2025 on uncertain footing. Despite steady growth and signs of consumer resilience, retailers now face a sophisticated new wave of fraud — one that extends far beyond the checkout page.

UK retail faces a new fraud frontier in 2025

According to Signifyd’s State of Commerce 2025 report, merchants are confronting an evolving threat landscape defined by first-party fraud, return abuse and sweeping changes to Visa’s fraud monitoring rules.

Once dominated by card-not-present scams, e-commerce fraud has shifted into more insidious forms.

“Fraud and abuse moved away from checkout towards the pre-purchase and post-purchase side,” explains Xavi Sheikrojan, Senior Manager of Risk Intelligence at Signifyd.

In practice, this means fraudsters are no longer stopped by stronger checkout protections such as Strong Customer Authentication (SCA); instead, they exploit weaknesses before and after the transaction.

Fake accounts, account takeovers and so-called “friendly fraud” — where customers falsely dispute legitimate charges — are rising sharply across Europe.

First-Party Fraud: The Hidden Epidemic

First-party fraud, or “first-party misuse”, has become a defining challenge.

Nearly every merchant surveyed by the Merchant Risk Council in 2024 — an astonishing 94% — reported experiencing some form of it in the previous year, with 63% seeing it rise year on year.

Inflationary pressure is partly to blame. As household budgets tighten, some consumers have turned to deceitful tactics to maintain their spending habits.

Meanwhile, a shadow economy of “fraud-as-a-service” enterprises now offers to stage refund or return scams on behalf of shoppers for a commission.

This blurring of lines between customer and criminal is deeply troubling. Return abuse, fake “item not received” claims, and serial refund requests are all eating into margins and testing merchants’ ability to balance customer trust with financial prudence.

The report cites a 33% surge in consumer abuse claims across EMEA in 2024, underscoring how fraud is increasingly disguised as ordinary customer behaviour.

Visa’s VAMP: Raising the Stakes for Retailers

Compounding these pressures is the introduction of Visa’s new Acquirer Monitoring Program (VAMP), which replaces earlier chargeback monitoring schemes from April 2025.

Designed to tighten control over excessive fraud and dispute rates, VAMP will introduce stricter thresholds and heavier penalties.

Even non-fraud disputes — such as “Item Not Received” or “Significantly Not as Described” claims — will count towards a merchant’s overall dispute ratio, making it easier for retailers to fall foul of the rules.

In practical terms, merchants exceeding a 0.9% dispute rate risk financial penalties or even the loss of their ability to process Visa payments.

Acquirers face their own limits of 0.3%, creating new friction between banks and merchants.

The inclusion of low-value disputes, previously excluded under older schemes, means that even minor chargeback activity could push a retailer into Visa’s penalty zone.

“That will go a long way toward building a better relationship between merchants and their banks,” Sheikrojan notes, “but it also means merchants must be much more proactive in fraud detection and pre-authorisation review.”

Return Fraud: The Billion-Pound Blind Spot

Returns remain the soft underbelly of e-commerce. In 2023, global retailers faced an estimated £545 billion in return-related costs, a figure expected to reach £779 billion by 2030.

In the UK alone, returners sent back £27 billion worth of online purchases last year, with £6.6 billion linked to serial returners.

Even more alarming: 8% of consumers admitted to falsely claiming a package never arrived, and 7% to returning empty boxes or counterfeit substitutes.

For retailers, the dilemma is acute. Consumers now expect frictionless, fast refunds — yet loosening controls opens the door to abuse.

Some merchants, such as apparel retailer Tuckernuck, have responded by delaying refunds until goods are physically inspected.

Others are experimenting with AI-driven “personalised returns” systems that calibrate refund speed and scrutiny according to the customer’s risk profile.

Fraud Prevention Beyond the Buy Button

The message from State of Commerce 2025 is clear: fraud prevention can no longer end at checkout.

The most progressive retailers are integrating fraud intelligence across the entire shopping journey — from account creation to returns — using AI to distinguish legitimate shoppers from opportunistic abusers in real time.

Those who succeed will protect not only their revenue but also the customer trust that underpins long-term profitability.