Cyber Security for Retail Tech

Executive Summary

Fashion retailers represent high-value cyber targets, processing sensitive customer data, handling substantial transaction volumes, and operating complex global supply chains. For CTOs, cyber security has evolved beyond IT hygiene to become a board-level business risk that directly impacts brand trust, revenue, and regulatory compliance. The retail sector now accounts for 6% of all global data breaches annually¹, with the average breach cost reaching £2.8 million². Yet this represents only the immediate financial impact—the long-term consequences of reputational damage and customer churn often exceed initial response costs.

With 80% of retailers experiencing cyberattacks in the past year³ and 60% of breaches involving human elements⁴, fashion retailers must implement comprehensive security strategies that address both technological vulnerabilities and human factors. The stakes continue to escalate as cybercrime costs are projected to reach £8.0 trillion globally by 2025⁵.

The Evolving Cyber Threat Landscape for Fashion

Payment Fraud and Financial Crime

Risk Profile: Fashion retailers face an evolving fraud landscape where criminals deploy sophisticated tactics including card testing attacks, account takeover fraud, and returns abuse. Card testing fraud has surged dramatically, with attacks increasing 65% between Q2 2024 and Q2 2025⁶. Fraudsters are shifting from historical low-value transaction testing to targeting expensive, resalable fashion items—creating a more damaging “win-win” scenario where they validate cards whilst obtaining valuable merchandise⁷.

Returns fraud represents an escalating threat, with abusive returns soaring 64% in May 2025 compared to January 2024⁸. The total value of retail returns reached £660 billion in 2024, with fraudulent and abusive returns accounting for 15.14% of all returns—representing £76 billion in direct losses⁹. Fashion and apparel retailers face particularly acute pressure as 51% of Gen Z consumers engage in bracketing (purchasing multiple items with intent to return some)¹⁰, fundamentally altering the fraud risk calculus.

Business Impact: Beyond direct financial losses averaging £2.8 million per breach², payment fraud creates cascading costs. Research shows that for every £100 lost to fraud, businesses actually lose £207 when wholesale costs, fulfilment, shipping, chargebacks, and processing fees are factored in¹¹. Moreover, 20% of customers stop purchasing from companies that have experienced data breaches⁶, directly impacting customer lifetime value. The 2025 data reveals that fraud pressure increased 13% by value across ecommerce¹², demonstrating that fraud is growing faster than revenue for many retailers.

Leadership Implication: CTOs must implement multi-layered fraud prevention strategies that address the full fraud lifecycle. This requires advanced fraud detection systems operating at pre-authorisation stages to minimise damage from card testing attacks before transactions reach issuing banks¹³. Fashion retailers must deploy AI-powered behavioural analytics capable of distinguishing legitimate bracketing behaviour from systematic returns abuse, whilst maintaining customer experience standards that 76% of consumers now demand for returns¹⁴. Integration with payment processors offering built-in fraud prevention tools becomes essential, particularly for card testing protection¹⁵. The September 2025 implementation of the UK’s Economic Crime and Corporate Transparency Act, making “failure to prevent fraud” a corporate offence, elevates fraud prevention from operational concern to regulatory imperative¹⁶.

Ransomware and Business Disruption

Risk Profile: Supply chain operations and retail systems held hostage through sophisticated ransomware attacks. The retail sector faces particular vulnerability due to seasonal demand patterns and just-in-time inventory models. Remote access attacks have emerged as a significant new threat vector, with Forter recording an 8% increase during the 2024 Black Friday/Cyber Monday period compared to 2023¹⁷.

Business Impact: Recovery costs extend far beyond ransom payments, with 68% of retailers reporting that business downtime represents the most likely outcome of cyberattacks¹⁸. During peak trading periods, system outages can result in millions in lost revenue per hour. Ransomware was present in 44% of all breaches in 2024, with the median ransom payment being £92,000¹⁹. The emergence of remote access attacks during critical shopping periods demonstrates how threat actors increasingly time attacks to maximise leverage.

Leadership Implication: CTOs must implement layered defence strategies including ransomware-resistant backups, comprehensive incident response playbooks, and business continuity plans that enable rapid system restoration. The rise in remote access attacks necessitates enhanced monitoring of remote working infrastructure and supply chain access points¹⁷.

Insider Threats and Privilege Management

Risk Profile: Employees, contractors, and temporary staff misusing privileged access to systems and customer data. The retail sector’s high employee turnover and extensive use of seasonal workers compounds this risk.

Business Impact: Insider threats account for significant data exposure, intellectual property theft, and regulatory violations. Research indicates that 78% of temporary employees hired in Q4 2024 did not receive social engineering training²⁰.

Leadership Implication: Implementing zero-trust architecture, comprehensive privilege management, and continuous monitoring becomes critical. CTOs must balance access requirements with security controls whilst maintaining operational efficiency.

Supply Chain and Third-Party Vulnerabilities

Risk Profile: Vulnerabilities in supplier systems, vendor networks, and technology partners create indirect attack vectors. The fashion industry’s complex global supply chains present extensive third-party dependencies. Research reveals that 42% of UK organisations have experienced supply chain fraud and 35% have experienced procurement fraud in the last 24 months²¹.

Business Impact: Supply chain attacks affect 52% of retailers¹⁸, with breaches propagating through vendor networks to compromise customer data and operational systems. Third-party involvement in breaches doubled to 30% in 2024²². The Forter and PwC 2025 report identifies key fraudulent activities throughout the retail supply chain including employee kickbacks in procurement, counterfeit goods in supplier fraud, theft with falsified shipping documents in logistics, and phantom inventory manipulation²³.

Leadership Implication: CTOs must establish comprehensive vendor due diligence processes, implement zero-trust principles for partner access, and maintain real-time visibility across the extended technology ecosystem. The convergence of cybersecurity risks with supply chain fraud requires integrated monitoring spanning both digital and physical supply chains.

Quantified Business Impact Assessment

Financial Exposure and Cost Structure

The financial implications of cyber incidents extend beyond immediate response costs:

Direct Breach Costs: The retail sector averages £2.8 million per breach², representing an 18% year-over-year increase. However, this figure understates the full economic impact, as organisations using extensive security AI and automation can save nearly £1.9 million compared to those with no use²⁴.

Fraud-Specific Costs: Payment fraud losses represent only the starting point. Signifyd data demonstrates that for every £100 in fraud losses, the actual cost reaches £207 when all associated expenses are included¹¹. With 66% of retail merchants reporting year-on-year increases in fraud²⁵, these compound costs create significant margin pressure.

Returns Fraud Impact: The £76 billion in fraudulent returns losses in 2024⁹ represents a growing category requiring dedicated prevention strategies. Fashion retailers face additional pressure as online purchases have higher return rates (17.6% compared to 10.02% for pure brick-and-mortar²⁶), amplifying fraud exposure in digital channels.

Regulatory Penalties: Non-compliance with DPA, GDPR, CCPA, and emerging privacy regulations can result in fines reaching 4% of annual turnover. Fashion retailers operating globally face multiple regulatory jurisdictions with varying requirements. The UK’s September 2025 implementation of corporate liability for “failure to prevent fraud” introduces new exposure categories¹⁶.

Business Disruption: Operational downtime during attacks creates immediate revenue impact, particularly during peak shopping periods. Research shows that 46% of companies shut down digital systems upon discovering breaches¹⁸.

Stock Market Impact: Approximately 23% of retailers experience stock price declines following cyberattacks¹⁸, reflecting investor concerns about operational resilience and customer trust.

Customer Trust and Brand Reputation

Customer Behaviour Impact: Following security incidents, 53% of retailers report reputational damage¹⁸, with customers frequently switching to competitors. This customer churn often represents the largest component of total breach costs. The returns experience has become a critical loyalty driver, with 65% of consumers indicating they would stop buying from a merchant based on a bad return experience, and 62% saying they would buy more based on a good return experience²⁷.

Trust Recovery Timeline: Rebuilding customer confidence requires sustained effort over multiple years, with some brands never fully recovering their pre-incident reputation levels.

Transparency Challenges: Despite reputational risks, 44% of retailers admit to withholding incident details from the public¹⁸, creating additional trust deficits when information eventually emerges.

Strategic Security Architecture Framework

Zero-Trust Implementation

Core Principles: Implement “never trust, always verify” architectures that authenticate and authorise every transaction, user, and device accessing systems.

Technology Components:

• Identity and access management with multi-factor authentication
• Network segmentation and micro-segmentation
• Continuous monitoring and threat detection
• Device compliance and endpoint protection

Business Integration: Zero-trust models must accommodate seasonal staffing variations, partner access requirements, and customer experience expectations whilst maintaining security rigour.

Automated Threat Detection and Response

AI-Powered Security Operations: Deploy machine learning algorithms for real-time threat detection, anomaly identification, and automated incident response. The mean time to identify and contain breaches fell to 241 days in 2025, with organisations using security AI achieving 80-day faster response times²⁸.

Fraud-Specific Detection: Implement pre-authorisation fraud screening to identify card testing attacks before transactions reach issuing banks, minimising processing fees and chargeback exposure¹³. Deploy behavioural analytics capable of identifying patterns such as rapid transaction velocities, card-type switching, and suspicious shipping address manipulation that characterise testing attacks²⁹.

Integration Requirements: Security tools must integrate seamlessly with existing retail systems, including point-of-sale devices, inventory management, and customer relationship management platforms.

Scalability Considerations: Security infrastructure must scale dynamically to accommodate seasonal traffic spikes, promotional campaigns, and business growth without compromising performance. The 8% increase in remote access attacks during Black Friday/Cyber Monday 2024¹⁷ demonstrates how threat actors exploit high-volume periods, requiring elastic security capacity.

Cyber Resilience and Recovery Capabilities

Ransomware-Resistant Infrastructure: Implement backup strategies that protect against ransomware attacks, including immutable storage, air-gapped systems, and regular recovery testing.

Business Continuity Planning: Develop comprehensive plans that enable continued operations during security incidents, including alternative payment processing, offline sales capabilities, and customer communication strategies.

Incident Response Excellence: Establish practised response procedures that minimise breach duration and impact. The global average breach detection and containment time improved to 241 days in 2025³⁰, highlighting the importance of advanced monitoring capabilities.

Returns Management and Fraud Prevention

Intelligent Returns Systems: Deploy real-time returns technology capable of approving, warning, or denying returns based on behavioural patterns³¹. Implement item verification capabilities that enable immediate refunds for legitimate customers whilst flagging potential abuse³².

Data-Driven Policy Optimisation: Balance fraud prevention with customer experience, recognising that 55% of consumers have decided not to purchase from retailers with restrictive return policies³³. Use analytics to identify abuse patterns whilst maintaining frictionless experiences for the 76% of consumers who consider free returns a key shopping factor¹⁴.

Omnichannel Monitoring: With Buy Online Return Instore (BORIS) and Buy Online Return Online (BORO) accounting for over 52% of returns³⁴, implement integrated monitoring spanning digital and physical channels to detect cross-channel fraud schemes.

Executive Leadership Framework

Governance and Risk Management

Board-Level Oversight: Establish regular cyber risk reporting to board level, including quantified risk assessments, incident trends, and investment requirements. Cyber security must be positioned as a strategic business enabler rather than purely a cost centre. With fraud pressure increasing 13% by value¹², board-level awareness of fraud economics becomes essential.

Regulatory Compliance Strategy: Develop comprehensive compliance frameworks addressing GDPR, PCI DSS, and emerging regulations across all operational jurisdictions. Prepare for the UK’s September 2025 Economic Crime and Corporate Transparency Act, which introduces corporate criminal liability for failure to prevent fraud¹⁶.

Risk Quantification: Implement metrics that translate cyber risks into business language, including potential revenue impact, customer trust indices, and competitive positioning assessments. Use the true cost multiplier of fraud (207% of direct losses¹¹) to accurately model financial exposure.

Cultural Transformation and Human Factors

Security Awareness Programmes: Develop comprehensive training that addresses the reality that 60% of breaches involve human elements⁴. Training must be tailored to different roles, including seasonal staff, contractors, and executives. The statistic that 78% of Q4 2024 temporary employees received no social engineering training²⁰ highlights a critical gap requiring immediate attention.

Incident Reporting Culture: Create environments where employees feel comfortable reporting potential security issues without fear of blame or punishment. This cultural shift is essential for early threat detection and response.

Cross-Functional Collaboration: Build security competencies across business units, ensuring marketing, merchandising, and operations teams understand their roles in maintaining cyber resilience. Returns management teams require fraud awareness training, recognising that 93% of retailers identify fraud and exploitive behaviour as a significant issue³⁵.

Technology Investment Strategy

Cloud-Native Security Platforms: Prioritise scalable, automated security solutions that can adapt to business growth and evolving threat landscapes. Cloud-native security operations enable superior talent access and cost efficiency compared to traditional approaches.

Fraud Prevention Technology: Invest in pre-authorization fraud detection, behavioral analytics, and returns intelligence platforms. Given that card testing increased 65%⁶ and returns abuse increased 64%⁸ in the past year, these specialized capabilities deliver measurable ROI through fraud prevention.

API Security and Integration: As fashion retailers adopt composable commerce architectures, API security becomes critical for protecting data flows between systems and partners.

Emerging Technology Preparedness: Develop security frameworks that can accommodate new technologies including AI shopping agents (agentic commerce), IoT devices, and augmented reality applications whilst maintaining comprehensive protection. The rise of agentic commerce creates new fraud blind spots requiring proactive planning²⁷.

Implementation Roadmap and Priorities

Phase 1: Foundation Security

• Comprehensive security assessment and gap analysis
• Zero-trust architecture planning and design
• Core security tool deployment and integration
• Initial staff training and awareness programmes

Phase 2: Advanced Capabilities

• AI-powered threat detection implementation
• Pre-authorisation fraud screening deployment
• Returns intelligence platform integration
• Supply chain security programme establishment
• Enhanced monitoring and analytics capabilities

Phase 3: Resilience and Innovation

• Ransomware-resistant infrastructure completion
• Advanced threat hunting capabilities
• Agentic commerce security framework development
• Security innovation programme launch
• Continuous improvement and optimisation processes

Phase 4: Strategic Integration

• Business-driven security metrics implementation
• Competitive differentiation through security excellence
• Industry leadership and thought leadership development
• Ecosystem security collaboration and partnerships

Conclusion: Security as Strategic Advantage

Comprehensive cyber security represents far more than protection—it constitutes a competitive advantage in the global fashion marketplace. CTOs who successfully implement robust security architectures while maintaining operational excellence position their organisations for sustained growth and customer trust.

The most successful fashion retailers recognise cyber security as an enabler of business innovation rather than a constraint on operational efficiency. By investing in security automation, fraud prevention, threat intelligence, and resilience capabilities, CTOs can create sustainable competitive advantages whilst protecting the brand equity and customer relationships that drive long-term success.

The 2025 data reveals an accelerating fraud landscape where card testing attacks increased 65%⁶, returns abuse surged 64%⁸, and overall fraud pressure grew 13% by value¹². These metrics demonstrate that reactive security management no longer suffices. The transformation from reactive security management to proactive cyber resilience requires executive leadership that understands security as fundamental business strategy. Organisations that achieve this transformation realise measurable improvements in operational efficiency, customer confidence, and competitive positioning whilst building capabilities that enable future innovation and growth.

The September 2025 implementation of the UK’s corporate criminal liability for “failure to prevent fraud”¹⁶ underscores that security excellence has transitioned from competitive differentiator to regulatory requirement. Fashion retailers that invest strategically in comprehensive security and fraud prevention capabilities will not only protect their operations but establish themselves as trusted partners in an increasingly security-conscious marketplace.

Image courtesy of UnSplash

---

References

Market Data and Breach Statistics ¹ VikingCloud. (2025). 207 Cybersecurity Stats and Facts for 2025. “The retail industry accounts for 6% of all global data breaches annually.”

² IBM. (2025). Cost of a Data Breach Report 2025. IBM Security’s global study found the retail sector averages £2.8 million per breach with 18% year-over-year increase.

³ VikingCloud. (2024). Retail Cybersecurity Stats, Threats, and Solutions for 2025. Retail Cyber Threat Survey findings.

⁵ VikingCloud. (2025). Cybersecurity Statistics. Cybersecurity Ventures projection, converted from USD $10.5 trillion.

Verizon Data Breach Investigations Report 2025 ⁴ Verizon Business. (2025). 2025 Data Breach Investigations Report. Analysis of over 22,000 security incidents showing 60% of breaches involved human element.

¹⁹ Verizon Business. (2025). 2025 Data Breach Investigations Report. Ransomware present in 44% of breaches with median payment of £92,000.

²² Verizon Business. (2025). 2025 Data Breach Investigations Report. Third-party involvement in breaches doubled to 30%.

Signifyd Fraud and Returns Research ⁶ Signifyd. (2025). State of Fraud and Returns Report 2025. Card testing attacks increased 65% between Q2 2024 and Q2 2025.

⁷ Signifyd. (2025). State of Fraud and Returns Report 2025. Fraudsters shifting to testing expensive, resalable items whilst obtaining valuable merchandise.

⁸ Signifyd. (2025). State of Fraud and Returns Report 2025. Abusive returns up 64% in May 2025 compared to January 2024, with overall percentage of abusive returns nearly doubling.

¹¹ Signifyd. (2023). State of Fraud 2023 Report. For every £100 lost to fraud, businesses lose £207 when wholesale costs, fulfilment, shipping, chargebacks, and processing fees are factored in.

¹² Signifyd. (2025). State of Fraud and Returns Report 2025. Fraud pressure increased 13% by value in 2025.

¹³ Signifyd. (2025). State of Fraud and Returns Report 2025. Pre-authorisation fraud screening minimises damage from card testing attacks.

²⁷ Signifyd. (2025). State of Fraud and Returns Report 2025. Consumer sentiment on return experiences and agentic commerce challenges.

Forter and PwC Research ¹⁶ Forter & PwC. (2025). Futureproofing eCommerce Fraud Prevention in 2025: From Supply Chain to Checkout. UK Economic Crime and Corporate Transparency Act 2023 (ECCTA) effective 1st September 2025.

¹⁷ Forter & PwC. (2025). Futureproofing eCommerce Fraud Prevention in 2025. Remote access attacks increased 8% during 2024 Black Friday/Cyber Monday period.

²¹ Forter & PwC. (2025). Futureproofing eCommerce Fraud Prevention in 2025. PwC’s Global Economic Crime Survey 2024 found 42% of UK organisations experienced supply chain fraud and 35% experienced procurement fraud.

²³ Forter & PwC. (2025). Futureproofing eCommerce Fraud Prevention in 2025. Supply chain fraud activities throughout retail supply chain.

Returns and Retail Research ⁹ Appriss Retail & Deloitte. (2024). 2024 Consumer Returns in the Retail Industry Report. £508 billion returned in 2024 (13.21% of retail sales), with £76 billion in losses tied to return and claims fraud. Fraudulent returns represented 15.14% of all returns.

¹⁰ NRF & Happy Returns. (2024). 2024 Consumer Returns in the Retail Industry. 51% of Gen Z consumers engage in bracketing behavior.

¹⁴ NRF & Happy Returns. (2024). 2024 Consumer Returns in the Retail Industry. 76% of consumers consider free returns a key factor in deciding where to shop.

²⁶ NRF & Appriss Retail. (2023). Online return rate of 17.6% compared to 10.02% for pure brick-and-mortar.

³¹ Appriss Retail & Deloitte. (2024). 2024 Consumer Returns in the Retail Industry Report. 35% of retailers implemented real-time return technology.

³² NRF & Happy Returns. (2024). 2024 Consumer Returns in the Retail Industry. Item verification enabling immediate refunds.

³³ Appriss Retail & Deloitte. (2024). 2024 Consumer Returns in the Retail Industry Report. 55% of consumers decided not to purchase from retailers with restrictive return policies.

³⁴ Appriss Retail & Deloitte. (2024). 2024 Consumer Returns in the Retail Industry Report. BORIS and BORO combined accounted for over 52% of all consumer returns in 2024.

³⁵ NRF & Happy Returns. (2024). 2024 Consumer Returns in the Retail Industry. 93% of retailers said retail fraud and exploitive behavior is a significant issue.

Retail-Specific Cybersecurity Research ¹⁸ VikingCloud. (2024). Retail Cybersecurity Stats, Threats, and Solutions for 2025. Comprehensive retail cyber threat survey data including business downtime (68%), reputational damage (53%), supply chain attacks (52%), stock price declines (23%), transparency issues (44%), and system shutdowns (46%).

²⁰ VikingCloud. (2024). Retail Cybersecurity Stats, Threats, and Solutions for 2025. “78% of temporary employees hired in Q4 of 2024 did not receive social engineering training.”

²⁵ Ravelin. (2025). Online Retail Fraud Trends 2025. 66% of retail merchants report year-on-year increase in fraud.

AI and Automation in Security ²⁴ IBM. (2025). Cost of a Data Breach Report 2025. “Organisations using extensive security AI and automation identified and contained breaches 80 days faster and saw cost savings of nearly £1.5 million.”

²⁸ IBM. (2025). Cost of a Data Breach Report 2025. Mean time to identify and contain breaches fell to 241 days, with AI-enabled organisations achieving 80-day faster response.

³⁰ Secureframe. (2025). 110+ of the Latest Data Breach Statistics to Know for 2026 & Beyond. Global average breach detection and containment timeline.

Card Testing Fraud Research ²⁹ Multiple sources including J.P. Morgan, Stripe, Mastercard, and payment security vendors documenting card testing attack patterns and prevention strategies.

Additional Industry Sources

• Palo Alto Networks. (2024). 2025 Unit 42 Global Incident Response Report. Dwell time reduction and cloud security trends.
• SentinelOne. (2025). 50+ Cloud Security Statistics in 2025. Cloud security incident rates and organisational impacts.
• UK Government. (2025). Cyber Security Breaches Survey 2025. Department for Science, Innovation and Technology analysis of UK cybersecurity landscape.

All cybersecurity statistics and cost data are derived from industry-leading security research organisations, vendor-neutral studies, official government reports, and trusted fraud prevention platforms Forter and Signifyd published between 2024-2025. Financial impact figures represent global averages unless otherwise specified.