Digital fraud is nothing new; it's been a problem since the early days of the internet. The problem has historically been focused on markets like North America and Europe. However, this may change.

A recently published report from transaction monitoring firm Sumsub points to an alarming increase in fraudulent activity within the Asia-Pacific (APAC) region. 2024 of them Identity Fraud Report reveals that, between 2023 and 2024, the APAC region experienced a 121% increase in the number of verified identity fraud attacks.

Cases of identity fraud grew mostly in Singapore; the city-state witnessed a 207% increase in attacks compared to the previous year. Thailand recorded a year-on-year increase of 206%, while Indonesia saw the incidence of identity fraud increase by 201%.

According to the study, fake document fraud was the most common form of identity fraud in the APAC region, accounting for 50% of all attacks. Other tactics frequently observed in the region include chargeback scams (15% of fraud attacks), account takeover (12%), deepfakes (7%) and fraud networks (4%).

Of course, these numbers need some context. Examining fraud rates as a percentage of all of them transactions may provide further data.

About 6.02% of all transactions in Indonesia, for example, are fraudulent. Other developing countries in the APAC region, such as Pakistan and Bangladesh, also experience some of the highest fraud rates globally, at 4.28% and 4% respectively. While these countries have taken steps to reduce their fraud rates, the report notes that “regions facing financial instability are more vulnerable to fraud, as economic pressures drive individuals to seek alternative, often illegal, means of income “. In other words, high fraud rates may be one of many growing pains emerging economies must endure, if the report is to be taken at face value.

The wide delta in fraud rates between developing and developed countries lends credence to this claim. In the United States, a relatively small 1.66% of transactions are fraudulent; in Canada, this figure is 1.45%.

Related: How we can win the AI ​​arms race against fraud

What does this mean for marketers?

To put it plainly, e-commerce merchants who do business with it customers in Asia-Pacific the market may have to accept a large number of fraud attempts—and the resulting high chargeback rates—as the cost of doing business.

A recent Visa report clearly states this conundrum: “…merchants of all sizes in the Asia Pacific (region) report that 3.3%, or US$33 out of every US$1,000, of their total e-commerce revenue is lost to fraud each year of payments.” Worse, fraud losses appear to be increasing. The report goes on to say that APAC merchants lost 2.9% of revenue due to payment fraud in 2023, a figure that suggests fraud losses incurred by merchants in the region increased by 0.4% last year alone.

Traders can make several moves here. As described above, for example, 15% of observed fraud attempts in the APAC region are related to chargeback fraud, and merchants can challenge these invalid cases through the dispute resubmission process. However, profit is neither automatic nor probable.

As the Visa report explains, merchants in the APAC region have a dispute win rate of less than 20%. They ultimately recover only $156 out of every $1,000 discussed. These numbers closely mirror the numbers in 2024 Fee Return Field Reportshowing that merchants successfully recover revenue from only 18% of disputes filed against them.

Related: Almost half of Americans are concerned about being scammed by AI

Using AI to combat the rise of fraud

Fortunately, representation is not the only way to combat fraud attempts. Marketers can take a more proactive approach.

The authors of the Sumsub report I quoted above note that fraudsters are increasingly relying on AI as a cheap and scalable way to commit fraud. Deepfakes, for example, increased by 194% between 2023 and 2024 in the Asia-Pacific region. But AI can also empower businesses to fight back.

Merchants can deploy AI tools at checkout to monitor transactions and flag suspicious activity long before it escalates into full-blown payment disputes, for example. AI's capacity to analyze large amounts of data in real time can help identify behaviors associated with fraud. Behavioral analytics, which use the buyer's past buying habits to distinguish between normal and unusual activity, can also be used to curb related risks, such as fraud networks or money laundering.

The systems can also prevent other forms of identity fraud, such as account takeover attacks, by blocking redundant profile changes and flagging failed login attempts. Transaction Information they can even be cross-referenced with social data, public data and other information to identify and flag data inconsistencies.

Even after a sale, AI can help analyze post-transaction data like delivery addresses and flag customer return patterns or refund habits for red flags. Analyzing this data can also help merchants discover the root cause of customer complaints and take actionable steps to improve service delivery and reduce chargeback fees.

Related: How generative AI is fueling fake news and hoaxes online

Staying one step ahead

AI-enabled fraud detection is a promising concept. But it still needs to be combined with old-fashioned best practices to maximize a business's capacity to identify and stop fraud.

Multi-factor authentication, for example, is a good way to prevent account takeover fraud. This is a security measure that requires customers to provide a one-time SMS or PIN code in addition to a password. Sumsub's report states that “passwords (36%)…are the dominant method of account compromise in the APAC region in 2024.”

As AI and other technologies become more common, so will the opportunities and tactics for fraud. Marketers must aim to stay one step ahead to protect their revenue, data and operations from bad actors in a global marketplace.