UK retailers are feeling the squeeze from fraud like never before. According to payabl.’s Fraud in Europe report, nearly half of UK retail leaders (48%) have considered closing or scaling back their operations due to fraud’s financial and reputational impact.
The scale of the problem is stark: UK businesses lost an estimated £1.17 billion to fraud in 2024, according to UK Finance. Beyond direct financial losses, fraud is eroding customer trust and brand reputation, with more than half of retailers (52%) reporting reputational damage, rising to 67% among larger businesses. Even loyalty is under threat, with 21% noting that fraud has negatively impacted customer retention.
Fraud Hotspots: Returns, Stolen Payments, Chargebacks
The report identifies the most common fraud types hitting retailers:
- Fraudulent returns and refund fraud: 44%
- Fraudulent purchases using stolen payment details: 36%
- Chargeback or “friendly” fraud: 31%
These trends are shaping strategic decisions for 2026, with 84% of retail decision-makers feeling personally responsible for preventing fraud, and 74% dedicating more time and resources than last year to combating it.
“Fraud is actively shaping decisions about growth and even continued operation,” said Ugne Buraciene, Group CEO of payabl. “Merchants are investing more time, money, and energy than ever before, yet many still feel exposed. Without stronger coordination between banks, governments, payment providers, and online platforms, fraud will continue to dent business confidence and hinder economic growth.”
Broader Market Context
The surge in fraud compounds existing pressures on UK retailers. Between January and November 2025, the UK saw 25,840 company insolvencies, continuing a multi-year upward trend. Fraud is not the only factor, but it is increasingly cited as a driver of financial strain, especially for smaller retailers.
Despite the challenges, retailers remain proactive. 87% believe tackling fraud is critical to long-term success, and 76% plan to increase investment in fraud prevention in the coming year. Yet they’re calling for broader support: 88% say banks must do more, while 84% want clear government guidance on responsibility for tackling fraud.
AI and Tech Solutions Step In
To combat fraud more effectively, payabl. has partnered with Sift, an AI-powered fraud prevention platform. The collaboration aims to help merchants reduce chargebacks, block suspicious transactions, and maintain a frictionless customer experience.
Oleg Stefanets, Chief Risk Officer at payabl., emphasized practical steps businesses can take: “Clear refund and cancellation policies at checkout, improved customer service, and advanced fraud controls are crucial to identifying and stopping suspicious activity before it escalates.”
As fraud continues to evolve in complexity and frequency, UK retailers face a stark choice: invest in prevention and modern fraud technology or risk being squeezed out of the market.
