EverC, a leading Israeli technology company specializing in AI-driven merchant and marketplace risk intelligence, has released its annual trends report, which sheds light on the most prevalent global transaction fraud trends in 2022.
The report, titled "The 2023 Threat Landscape: A Report on Trends in Illicit E-commerce Activity," highlights the challenges faced by various players in the payments ecosystem, including banks, acquirers, payment providers, and online marketplaces.
Top threat: transaction laundering
Transaction laundering is a process of “digital money laundering,” in which criminals use legitimate businesses to process digital payments for illegal activities. This makes it difficult to track the money and identify the criminals involved.
According to EverC's findings, transaction laundering emerged as the most common method employed for illicit payment activity, accounting for a staggering 22% of all fraudulent transactions in 2022. Furthermore, the report reveals that transaction laundering witnessed the largest increase in the first quarter of 2023, surpassing all other forms of fraud by a significant margin with a staggering 39% rise.
The prevalence of transaction laundering as a preferred method for facilitating financial crimes is a matter of concern due to its wide-ranging negative impact. The anonymity provided by transaction laundering enables criminals to establish fraud rings globally, some of which have been found to be linked to human trafficking networks or known to provide support to terrorist organizations.
Drugs, gambling, pirating, porn, and makeup
The report also reveals that pharmaceutical fraud, intellectual property rights infringement, and gambling tied as the second most common forms of illicit e-commerce activity, each accounting for 15% of transactions.
Ranking slightly below those were the sale of illegal substances at 12%, and adult content at 9%.
The sale of counterfeit goods also represents a significant challenge in the online marketplace. In 2022, EverC successfully eliminated over 40,000 counterfeit products from its partner marketplaces, focusing on fake cosmetics. Among these products, perfumes accounted for 63% of the seizures, followed by skincare (16%) and makeup (15%), with a combined value exceeding $2 million.
Can AI fix it?
Addressing these pervasive fraud trends, EverC is developing an advanced AI-driven risk management solution designed to quickly detect high-risk merchants, transaction laundering, and illicit products. Moreover, the platform provides ongoing monitoring to identify evolving risks, equipping risk and compliance teams with actionable intelligence for making informed decisions based on evidence.