As festive online shopping surges, how are e-commerce firms using AI to detect fake orders, prevent fraudulent refunds?

The festive season is a crucial period for e-commerce majors and retailers to boost sales. Flash deals, discounts and last-minute purchases drive a flood of online orders, giving shoppers more choice and the convenience of faster delivery.

However, during this time, fake orders also surge, along with account misuse and fraudulent refund claims. For e-commerce platforms and logistics companies, the challenge is to identify suspicious orders, fake identities and fraudulent refund requests without disrupting the experience of genuine customers.

According to data from Datum Intelligence, India’s festive e-commerce order volumes are expected to grow from 760 million in 2025 to 966 million in 2026, marking a 27.1% increase. As more orders move through checkout, payment, delivery and returns systems in a short period, companies face greater difficulty in separating fraudulent activity from genuine customer demand.

The pressure is further heightened as the nature of online shopping changes. A Datum Intelligence report published in September expects the number of festive shoppers to rise by 14.5% this season, while each shopper is projected to place 11% more orders. The average order value, however, is expected to decline from ₹1,578 to ₹1,554. This means platforms and sellers will need to process more transactions while keeping delivery and fraud-control costs in check.

Why festive sales make fraud harder to detect

Beyond transaction fraud, e-commerce businesses face several other risks, including suspicious cash-on-delivery (COD) order bookings, fake customer identities, abuse of offers, account takeovers, fraudulent return requests and delivery tampering.

Traditional rule-based fraud systems typically flag transactions that meet specific criteria, such as orders above a certain value or repeated purchases from the same account or payment method. However, these checks may not be enough during a festive rush, when genuine customers may also place multiple or high-value orders.