Risk Rundown:
Grocery & supermarket ecommerce

Current fraud landscape

Your local supermarket has long been a relatively safe zone in terms of payment fraud and policy abuse. But online, it’s a different story. 

More than 60% of U.S. households bought groceries online in July 2025, contributing to a $10 billion market and 26% YoY growth. The digital grocery market is expected to grow 3x faster than in-store sales through 2028. In fact, online sales of CPG products are growing almost 5x faster than in-store sales.

That growth has significantly altered the industry’s fraud profile.

Grocers are seeing a rise in online sales, which means more card-not-present (CNP) transactions and, unfortunately, more fraud. Digital growth has also introduced fraud vectors like refund abuse, account takeovers (ATOs) of customer loyalty rewards, and gift card theft.

Now, as large grocers seek more operational control of their online businesses, those risks are hitting closer to home.

Insourcing ecommerce means onboarding risk

The pandemic turned grocery delivery from a convenience into an essential service, as millions of consumers turned to online ordering for delivery, curbside pickup, or ship-to-home fulfillment. Some grocers invested in their own apps and infrastructure, but many partnered with delivery services to minimize operational investment.

But with so much growth on the horizon, major supermarket chains are increasingly bringing online ordering and delivery in-house rather than relying solely on third-party services. Insourcing provides greater control over the customer experience, consumer data, shopper insights, and overall margins. That’s why American supermarkets like Kroger and superstores like Walmart now operate all or some of their own ecommerce businesses.

Unfortunately, online ordering makes it easier for fraudsters to use stolen payment information, and tight fulfillment timelines mean fraudulent orders can slip through before they’re flagged. As a result, grocers must absorb the losses without the financial buffer of a third-party provider.

Industry challenges

To compete against the massive established players in the digital grocery space, new entrants must offer fast, friction-free experiences, competitive prices, and a convenient assortment of goods. Delivering all of that not only puts pressure on merchants, but it also invites fraud.

Customer loyalty is vital, generational, and fragile

Customer loyalty is sine qua non for merchants in the grocery space. Grocery consumers shop frequently and establish familiarity and routines at the merchants they prefer. Those habits can stay ingrained for years, and preferences can be passed down generations. That means any given customer can represent decades-long lifetime value (LTV), and any friction or negative customer experience can have long-term costs. A single false decline can be a disaster.

Margins are low, and price matters

The Food Industry Association pegged net profits for food retail at an average of 1.7% in 2024, among the lowest of all industries. Since 1985, average margins have stayed in the 1% to 3% range, reaching the upper end only during the worst of the pandemic. Any new costs created by digital fraud can make a big dent in such thin margins.

What’s more, consumers are price-sensitive when it comes to delivery costs. Delivery is among the first things to be sacrificed during times of economic uncertainty (as it was in the inflationary period of early 2024). Should tariffs continue to cause prices to rise, consumers may simply drop delivery to save money.

Policy abuse has a new foothold

When shoppers don’t physically fill their own bags, as is the case with both grocery delivery and buy online, pickup in store (BOPIS), the potential for refund fraud rises. A large share of delivery fraud stems from customers who falsely claim issues like missing items or poor quality to receive unwarranted refunds.

Promo codes that help grocers acquire new shoppers or reward loyalty through a digital channel can also be abused, often by otherwise legitimate customers creating multiple accounts to repeatedly claim one-time promotions.

Under pressure = under threat

In the digital grocery space, competition is fierce, and the stakes couldn’t be higher. With established players dominating the market and new entrants scrambling to carve out a niche, the battle isn’t just about products — it’s about the entire customer experience. Here’s the harsh reality: everyone offers the same bananas, milk, and cereal. Product differentiation is almost nonexistent. What truly sets brands apart is how fast, seamless, and rewarding they make the shopping journey.

• Speed is non-negotiable: Same-day delivery is the standard, but the faster you deliver, the easier it becomes for fraudsters to exploit your system.
• Expanding product lines = expanding risk: To attract customers, grocers are venturing beyond CPG into high-value items like electronics — prime targets for fraudsters looking to cash in.
• Loyalty programs are a double-edged sword: Points and perks are great for customer retention, but they’re also a goldmine for fraudsters who steal and resell them.
• False declines are catastrophic: In a market where convenience reigns supreme, rejecting a legitimate customer at checkout is a surefire way to lose them forever. And with so many alternatives just a click away, they won’t hesitate to switch.
• Cost control is a tightrope walk: Balancing low fraud management costs alongside low delivery costs is a constant struggle, especially when every penny counts in this razor-thin margin industry.
• Promotions invite abuse: Discounts and incentives are essential to attract new customers and re-engage lapsed ones, but they also open the door to promo fraud and abuse.

Every customer interaction matters: a single bad experience — whether it’s a delayed delivery, a clunky checkout process, or a false decline — can send a customer straight into the arms of a competitor. And with so little to differentiate one brand from another, the margin for error is razor-thin.

For digital grocers, the message is clear: convenience, speed, and trust are the currency of survival. Failing to deliver on any of these puts you under threat, not just pressure.

Top risk trends for grocers

This section examines the fraud tactics Riskified is seeing in the online grocery space and how merchants can protect themselves as they adopt new strategies and innovate. 

When we state that a category or source is “riskier,” we mean that it is statistically more likely to involve fraud or abuse. We determine this by calculating the fraud attempt rate for each source based on a combination of known fraud cases we’ve blocked and confirmed chargebacks. These patterns help merchants understand emerging risks, fine-tune their fraud controls, and safely capture legitimate orders.

Risk by cart value

Riskified analysis revealed a challenging dilemma for digital grocery merchants seeking to balance fraud prevention and customer retention.

HIGH CART VALUE CHALLENGE

Circles’ sizes represent the risk level of the segment.

Cart values greater than $200 represent just 25% of order volume but are more than half of the potential revenue for grocers. Retaining big-spending, high-LTV customers is crucial for long-term revenue. But this segment is also 300% riskier than the rest of the shopping population and represents 80% of potential fraud dollar losses.

Precise decisions on this segment are essential. A single false decline can cause irreparable harm to the customer relationship, in part because a large cart often represents a significant time investment on the part of the online shopper. Being falsely declined after that long session can be incredibly frustrating and potentially ruin an important event (think, prepping for a holiday dinner).

Risk by product mix

Fraudsters know what fraud detection systems are looking out for, and they will cloak risky purchases by mimicking safe transactions.

Watch the price differential

With more online grocers offering non-grocery items to their inventory to keep up with supercenters and ecommerce giants, fraudsters can now purchase highly monetizable goods like electronics and gaming devices from popular grocery brands. 

PRICE GAP CONCERN

They can easily apply an MO common in other retail sectors, which involves mixing high-risk/high-value goods with low-risk/low-value products together in one cart to avoid triggering fraud detection systems.

Riskified analysis shows that carts containing more than a $50 gap between the highest- and lowest-value products are the riskiest and have a significantly higher probability of being fraudulent.

Gift cards on the side

As valuable as cash and easy to sell, gift cards are a fraud favorite. Fraudsters will frequently combine low-value goods in baskets with gift cards to elude detection.

GIFT CARD RISK

This MO is so common that digital carts containing a combination of gift cards and physical goods not only have a higher risk profile than the typical no-gift card basket, but they are actually riskier than gift card-only purchases.

Risk by fulfillment method

Riskified data reveals a 16% year-over-year increase in grocery delivery’s share of total transaction volume during H1 2025. Although the regular shipping segment accounts for a smaller portion of the overall market, it is 3.5 times riskier than BOPIS and represents a significantly larger share of fraudulent transactions. As this segment continues to gain popularity, grocery merchants should anticipate a corresponding rise in their overall risk profile.

Seasonal risk

HOLIDAY SEASON CHALLENGE

Not surprising, Riskified data showed a bump in monthly grocery sales value (+30%) and transaction volume (+16%) during the end-of-year holiday period in 2024.

Just as they do elsewhere in ecommerce, fraudsters take advantage of the chaos and the crowd. They know merchants are juggling more transactions than usual and may err on the side of approvals, leaving more room for fraudulent purchases to slip through. 

As a result, Riskified found that the total purchase volume (TPV) of fraudulent transactions from November to December of 2023 & 2024 increased by an average of 42%.

EBT abuse

In the U.S., phishing, cloning, and skimming techniques are driving fraud related to nutrition assistance programs to an all-time high. Abuse of electronic benefits transfer (EBT) cards tied to those programs creates unique problems for online grocery merchants. Much like gift cards, EBT debit cards have very few data points to link them to their authorized users, making them attractive to fraudsters and fueling black-market trade in EBT numbers and PINs.

Stolen credentials can be used for digital purchases tied to resale-for-cash schemes and other types of policy abuse that harm families in need and the merchants that serve them, potentially threatening program compliance.

Proven strategies

Grocers must be prepared for new risks as they continue to expand their digital operations. Accountable and experienced partners are essential, and accurate fraud decisioning is mandatory to preserve high approval rates and protect customer loyalty.

Tap into networked intelligence

By leveraging a vast dataset of past transactions from a global merchant network, grocery merchants can access valuable positive or negative signals that help create a more complete picture of every online shopper. This approach ensures grocers can make precise decisions, reduce fraud costs, and avoid customer insult.

With Riskified, virtually every shopper has a traceable identity that can be linked to other merchants in our network, whether it’s a pet supplier, fashion retailer, or home goods merchant. In the grocery sector, 94% of orders have external links in our network. And the average order has external links to 27 different transactions across five merchants to help support precise identity resolution, risk evaluation, and decision-making.

Adopt adaptive strategies

Because fraudulent orders are often executed in ways that mimic legitimate transactions — often through cart contents — detecting masking is crucial to distinguishing genuine transactions from fraudulent ones. Effective fraud prevention systems must leverage sensitive anomaly detection to uncover irregular patterns. 

Protect policies good customers love

Merchants need precise, identity-driven ways to prevent refund and promo abuse at checkout and efficient ways to win chargeback disputes. The ideal solution will empower grocers to identify complex patterns, proactively protect against abuse, and confidently deploy generous policies that fuel customer loyalty and growth.

Streamline customer support 

High percentages of manually reviewed orders in the grocery industry often lead to overwhelmed support teams, especially when dealing with abuse or delivery fraud. This overload not only delays resolutions but also detracts from the experience of loyal, legitimate customers. The result? Frustrated shoppers, diminished customer lifetime value (CLV), and a tarnished brand reputation.

Riskified helps alleviate this burden for many grocery merchants by automating their fraud detection and reducing the need for manual reviews. By cutting down on support calls, your team can focus on delivering exceptional service to your best customers. 

Partner with Riskified

Unleash growth with solutions designed to safeguard what matters most — your customers, your growth, and trust in your business.

Speak with an expert