Building digital trust by combating scam websites and fraudulent merchants

E-commerce has revolutionized how businesses and consumers engage in buying and selling. This unparalleled level of access has opened opportunities for reputable merchants, elevating growth and competition in the digital marketplace.  

But this accessibility has also created an environment exploitable by scam websites set up with the sole intention of committing fraud. These fraudulent actors often appear to be legitimate businesses with professional-looking websites, sophisticated advertising campaigns and appealing product offers. However, their aim is to deceive consumers into sharing payment details or making purchases for goods and services that are never delivered.  

In 2024, scams became the most prevalent type of website fraud, overtaking digital payment fraud. Scam-related fraud surged by 56%, while financial losses from scams soared by 121%. Scams by fraudulent merchants can lead to high chargeback rates as cardholders dispute unauthorized charges. When these merchants disappear after collecting payments, both acquirers and issuers are left to handle a surge in disputes and financial losses. The impact of such scams extends beyond immediate financial losses; it undermines consumer trust in digital commerce, damages the reputation of financial institutions and networks, and places legitimate businesses at a competitive disadvantage. 

This white paper explores the challenges posed by fraudulent merchants, with real-world examples and a spotlight on the Mastercard standards that shape fraud prevention efforts, and the tools and best practices used to combat these bad actors. It provides all stakeholders a strong framework to mitigate fraud and maintain trust in digital transactions.