The research, conducted by Ayden and the Centre for Economic Business and Research (CEBR), revealed that more than a third (35%) of UK retailers fell victim to various forms of fraudulent activities, cyber-attacks, or data leaks over the past year, representing a significant 37% increase compared to 2022.

Despite consumer concerns, the study found that only 63% of retailers claimed to have effective fraud prevention systems in place, though this marks a 10-percentage-point increase from the previous year. Nearly half (47%) have contemplated switching to payment providers offering enhanced fraud defence mechanisms.

On average, retail companies lost £1.4 million each to fraudulent attacks during the year, with luxury fashion retailers suffered the highest losses, averaging £2.8 million, followed by clothing and accessory retailers at £2.6 million, and health and beauty retailers at £1.1 million.

Furthermore, the study highlighted a concerning trend of increasing consumer vulnerability to payments fraud, with 33% of consumers falling victim to such fraud in 2023, compared to 23% in the previous year. The average amount lost by consumers to payments fraud rose by 16% to £311.09.

Payments fraud is when malicious actors steal credit or debit card information and make unauthorised purchases, which often occurs as a result of data breaches. 

Recommended reading

• Report: Farming and Retail Industries Benefiting Most From AI Grants
• Report: Retail is Losing The Ransomware Battle
• Retail and Digital Media Lead Customer Data Platform Spending This Year

The escalating threat of fraud is significantly impacting consumer behaviour, according to the report, with 26% feeling increasingly unsafe when shopping due to this risk. 

A significant portion (23%) also expressed preference for retailers requiring multiple forms of verification for online purchases, while 16% actively choose to patronise in-person stores with heightened security measures.

The survey gathered the results from 38,151 adults polled across the globe, with 2002 consumers polled in the UK. There were also 13,177 merchants polled, with 504 from the UK.