According to the U.S. Federal Trade Commission, consumers reported losing more than $12.5 billion to fraud in 2024 — a 25% increase over the previous year. Online shopping issues were the second most-reported type of fraud incident in 2024.
As fraudsters and scam artists become more pervasive and sophisticated, businesses face a dual risk: they could be targeted by fraud that not only causes financial losses but also harms their reputation in the eyes of consumers.
It only takes one fraud incident to shake a customer’s confidence in a brand. Fortunately, businesses can adopt tactics and tools like tokenization to combat fraud and protect their reputations.
How fraud impacts brand reputation
In addition to financial losses, fraud incidents have negative implications for brand reputation and consumer confidence. Fraud is a top consumer concern, and payment scams are on the rise as more transactions take place online.
According to the Discover® Network-led Payments State of the Union research:
- An overwhelming majority of consumers (98%) say the security of their personal information is important when deciding to use an emerging payment experience, such as instant or biometric payments.
- When making purchases, 76% of consumers are willing to take additional steps at log-in or checkout to boost security.
- Additionally, 59% of consumers say fraud protection/security capabilities influence their decision to use one payment provider over another.
Given the importance of security among consumers, it’s no surprise that a single breach can diminish trust and damage perceptions of the brand involved. According to one survey, three-quarters of consumers would no longer buy from a brand that had a cybersecurity incident. In addition, fraud incidents often result in negative media coverage, which can further diminish the company in the eyes of consumers — including those who were not directly affected. In a recent survey, 32% of businesses reported negative press coverage resulting from fraudulent attacks in the previous 12 months.
Unfortunately, once an incident has occurred, repairing brand reputation and rebuilding consumer trust can be much harder than preserving them by protecting your business upfront with robust fraud prevention tactics. Solutions by Discover Network provide the technology to support these important priorities, build consumers’ confidence in your brand and drive growth.
Tokenization helps brands combat fraud in the digital age
Tokenization plays a fundamental role in enabling smart, seamless and more secure digital payments. Unlike encryption, which scrambles sensitive data, tokenization replaces it with unique tokens that cannot be reverse-engineered. That means they are useless to fraudsters even if intercepted. This helps keep sensitive cardholder information secure without introducing additional steps to payment processes.
According to the 2025 Discover Network Global Merchant Survey:
- 83% of merchants believe network tokenization is at least somewhat effective in preventing fraud.
- 78% anticipate it will provide value for their organizations within the next three years.
Discover Stored Payment Tokens help ensure customer payment information is protected and supported in an evolving digital payments ecosystem. The tool enables automatic card updates to reduce payment breakage while enhancing security and the overall payment experience, no matter where a digital payment is made. This provides an extra layer of defense without adding complexity to the customer experience.
Other tools and solutions for mitigating fraud risk
In addition to tokenization, businesses can leverage a variety of other technology-driven tools and solutions to protect payment information and preserve customer trust.
- Discover Enhanced Decisioning leverages issuer machine-learning models to connect a broad range of customer and transaction data with spending patterns using a risk-based authorization approach. According to research from Discover Network, 90% of merchants anticipate that enhanced decisioning data will provide at least some value for their organization over the next three years.
- ProtectBuy is a Three-Domain Secure (3DS) customer authentication solution that validates consumer identity at the time of purchase and provides a real-time required action for high-risk transactions. This tool ensures secure transactions across multiple device types, including mobile, desktop and gaming consoles.
AI, and generative AI in particular, also offer new opportunities to protect customers against fraud. AI’s ability to analyze large volumes of data and recognize patterns consistent with fraud can help businesses more effectively detect and address fraud incidents. More than half (52%) of merchants plan to apply AI to their commerce strategy for fraud prevention over the next 24 months, according to Discover Network’s research.
While AI can be a powerful tool in the fight against fraud, businesses should not rely entirely upon it. According to Kate Lybarger, Head of Payments Innovation at Discover Network, the vast amounts of data required to train AI models can pose challenges. As a result, it’s imperative that humans validate AI outputs to ensure accuracy.
Fraud is an ever-evolving threat to businesses and consumers in the digital age. By investing in tools and technology to mitigate fraud risk, businesses can protect their most valuable asset: their reputation. Discover Network empowers business customers with the technology they need to build and maintain the trust of cardholders in their communities and around the world.
