Retailers and payment providers are facing a growing wave of AI-powered online scam stores as fraudsters use generative AI tools to build fake ecommerce businesses that look increasingly legitimate.
New research and security updates from Mastercard show that criminals are using AI-generated customer reviews, deepfake videos and professional-looking websites to trick shoppers into making purchases or sharing payment details.
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The company said the problem has become harder to detect as scam merchants can now launch online storefronts quickly and at low cost.
According to the Global Anti-Scam Alliance, consumers worldwide lost an estimated $442 billion to online scams in 2025. Mastercard warned that fake merchant activity is damaging trust in digital commerce and increasing pressure on retailers, banks and payment providers.
“Digital commerce only works when people trust what’s on the other side of the screen,” said Ann Johnson, executive vice president of security solutions at Mastercard.
Fraud risks grow
The growth of ecommerce during and after the Covid-19 pandemic helped many retailers move online quickly. The same technology also created new opportunities for cybercriminals.
Mastercard said fraudsters are now using ready-made ecommerce templates, targeted digital advertising and automated payment systems to create fake stores that are difficult for shoppers to identify.
Some scam sites send counterfeit goods, while others take payments and disappear without delivering anything.
The company also warned that many fake stores are being used for phishing attacks. Criminals collect card details during checkout and later use or sell the stolen information.
Industry concern over AI-driven fraud has grown sharply in recent months as retailers adopt more AI tools across ecommerce operations. Mastercard said traditional fraud warning systems are struggling to keep pace because scam merchants can appear and disappear rapidly.
“Every bad experience online makes shoppers second-guess legitimate businesses,” said Simon Collins, Mastercard’s chief franchise officer. “When confidence cracks, businesses pay for it.”
New merchant checks
To address the problem, Mastercard has launched Merchant Trust Services, a system designed to help banks and payment companies identify risky merchants earlier in the onboarding process.
The service combines network data, cyber intelligence, identity tools and real-time analytics to assess whether a merchant is legitimate. Mastercard said the platform is intended to help payment providers stop fraudulent sellers before they begin accepting payments.
The company is also introducing a Merchant Scam & Risk Indicator system that gives banks additional risk signals during payment authorisation.
In a pilot programme with a major card issuer, Mastercard said the tool identified around 80% of risky merchants and in some cases flagged them up to 90 days before formal escalation.
Mastercard said the new systems will first launch in Europe and the United States before expanding globally later this year.
The payments company is also tightening its fraud monitoring rules. From July, banks and payment facilitators working with Mastercard will be required to investigate suspicious merchant activity within 72 hours once certain risk thresholds are reached.
Pressure on retailers
The rise of AI-powered scam stores comes as retailers face wider changes linked to artificial intelligence and digital commerce.
Payment companies and ecommerce platforms are investing heavily in AI-based fraud detection systems as online shopping volumes continue to rise. Mastercard said fraud prevention and payment optimisation are becoming increasingly connected because failed fraud controls can lead to higher chargebacks, payment disputes and abandoned shopping carts.
Retailers are also under pressure to maintain customer trust as AI changes how consumers search for products and complete purchases online.
Mastercard recently said future “agentic commerce” systems, where AI tools make purchases on behalf of consumers, will depend heavily on trusted payment and identity systems.
For merchants, the immediate challenge is more practical: proving to customers that their businesses are genuine while preventing fraud losses and protecting payment data.
“If we want everyone to benefit from the digital economy,” Johnson said, “then trust has to be built in, not bolted on after something goes wrong.”
