Retail Fraud Should Be Spelled RetAIl Fraud
May 16, 2025
As brick-and-mortar stores approach extinction and nearly all shopping migrates to the Web, AI introduces new vulnerabilities to the marketplace. Shocking, we know. Cyber Security Intelligence reports, “ChatGPT’s Image Generation Could Be Driving Retail Fraud.” We learn:
“The latest AI image generators can create images that look like real photographs as well as imagery from simple text prompts with incredible accuracy. It can reproduce documents with precisely matching formatting, official logos, accurate timestamps, and even realistic barcodes or QR codes. In the hands of fraudsters, these tools can be used to commit ‘return fraud’ by creating convincing fake receipts and proof-of-purchase documentation.”
But wait, there is more. The post continues:
“Fake proof of purchase documentation can be used to claim warranty service for products that are out of warranty or purchased through unauthorised channels. Fraudsters could also generate fake receipts showing purchases at higher values than was actually paid for – then requesting refunds to gift cards for the inflated amount. Internal threats also exist too, as employees can create fake expense receipts for reimbursement. This is particularly damaging for businesses with less sophisticated verification processes in place. Perhaps the scenario most concerning of all is that these tools can enable scammers to generate convincing payment confirmations or shipping notices as part of larger social engineering attacks.”
Also of concern is the increased inconvenience to customers as sites beef up their verification processes. After all, the write-up notes, The National Retail Federation found 70% of customers say a positive return experience makes them more likely to revisit a seller.
So what is a retail site to do? Well, author Doriel Abrahams is part of Forter, a company that uses AI to protect online sellers from fraud. Naturally, he suggests using a platform like his firm’s to find suspicious patterns without hindering legit customers too much. Is more AI the solution? We are not certain. If one were to go down that route, though, one should probably compare multiple options.
Cynthia Murrell, May 16, 2025
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