78% of Shoppers Worry About Holiday Fraud Surge

A recent PYMNTS Intelligence report finds that retailers will enter this year’s peak shopping season defending themselves on more fronts than ever before.

The report, Securing the Season: Fighting Fraud Without Losing Customers, outlines how the growth of holiday sales is being matched by the growth of holiday fraud. It shows how criminals exploit higher transaction volumes, how artificial intelligence is reshaping risk on both sides of the checkout counter and why merchants are being pushed to move from seasonal defenses to continuous protection. The report also highlights the role of customer service and authentication practices in reducing chargebacks that often pile up after January. Retailers have little room for error during the final stretch of the year. This is when margins matter most.

• The Federal Trade Commission estimates consumers lost more than $12.5 billion to fraud in 2024, a 25% increase from 2023.

• Seventy eight percent of Americans say cybercrime intensifies during the holidays, while 59% report rising concerns about scams.

• Fifty two percent of businesses are implementing new AI models for fraud detection and customer decision making.

The report points out that holiday fraud is no longer limited to phishing schemes or card-not-present attacks. First-party fraud is growing as well. Chargebacks driven by buyer’s remorse or strained post-holiday budgets now account for 75% of fraud for digital goods merchants, and most customers bypass merchants entirely, going straight to their bank. That bypass turns a simple return into an expensive dispute. Retailers are learning that fraud risk runs well beyond a hacked account or a stolen card. Customer behavior plays a larger role than ever.

The data also show that attackers are becoming more strategic. Sign-up attacks increased 309% during the 2024 holiday season. A single coordinated wave of account takeovers across gaming platforms resulted in losses of more than $145,000. Criminals track consumer activity and strike during high traffic windows. Retailers must match that speed. They must also match the sophistication.

AI is reshaping the threat landscape. Criminals are using generative tools to clone brand identities, mimic customer behavior and bypass once reliable safeguards. Google’s reCAPTCHAv2 can now be defeated by bots with perfect accuracy. Younger consumers are particularly vulnerable to deepfakes. One in three shoppers 18 to 34 have fallen victim to these scams. Vulnerability begins early in the journey. It escalates quickly.

Yet the report shows that AI is also strengthening the tools available to merchants. Real-time monitoring can reduce false positives by as much as 85% while doubling the detection of compromised cards. Adaptive machine learning models help merchants stay current as fraud patterns shift. Partnerships are also building stronger defenses. Worldpay’s acquisition of Ravelin brings more advanced fraud detection to its platform, while its joint Know Your Agent framework with Trulioo creates new safeguards for AI-driven commerce. Retailers now have more ways to authenticate both customers and automated agents. Security improves. Friction falls.

The holiday season may compress risk into a short window, but the report concludes that merchants must now treat fraud as a year-round concern. Reactive strategies no longer keep pace with evolving threats. Proactive investments in layered defenses, transparent data practices and faster customer service responses offer a more durable path forward. Fraud never slows down. Merchants cannot either.