Payment fraud surges 25% despite stronger security measures like 3DS

Payment fraud has increased by around 25%, according to a new analysis by Fraudio. The report highlights ongoing risks even when security measures like 3DS are in place. It also points to rising challenges for legitimate customers caught by strict fraud controls. Fraudio’s data shows fraud occurred both in transactions without 3DS and in those where 3DS was used successfully. This underscores the need for layered fraud prevention. The strongest fraud signals came from shared infrastructure, with over 90% of cases linked to IPs connected to many cards.

Transactions routed through submerchants had a higher fraud rate than direct merchant transactions. This suggests layered commerce models may carry greater risk. The company also noted that network-level fraud can be harder to detect quickly, limiting the effectiveness of transaction-by-transaction screening.

Fraudio’s false-positive proxy rose during the period, indicating more legitimate customers may be flagged incorrectly. This points to a growing issue with customer friction and the need for more precise controls. The findings reveal a complex fraud landscape. Shared infrastructure and submerchant transactions pose significant risks. Meanwhile, blunt fraud controls may increasingly disrupt legitimate users.