December 10 2006

Investment in fraud prevention pays off for internet retailers

UK online retail fraud remains low and, for many retailers, is now beginning to fall, according to the third annual CyberSource UK Online Fraud Report.

In a survey of 150 online retailers carried out by researchers Vanson Bourne for the report:

73% reported that losses from fraud have stalled or fallen as a proportion of revenue

58% reported that fraud levels are static or down in actual monetary value

46% now use an automated system to collate the results from multiple checks and screens, and assess the probability of fraud on a given transaction

The researchers found that UK retailers typically use six different tools to assess the likelihood that a transaction is fraudulent and they spend between £10,000 and £100,000 a year on deploying and managing fraud prevention tools.

"The online shopping environment is often portrayed as a haven for criminals and tricksters, but this simply isn't the case," explained Jo Tucker, Managing Director of the Interactive Media in Retail Group (IMRG). "The continuing growth of online spending will inevitably prove tempting for criminals but the industry is demonstrating a mature approach to tackling the problem."

"By deploying a range of tools to create defence in depth, and adding new tools as they become available, retailers are making the online shopping environment increasingly secure," says Nathan Jackson, Managing Director of CyberSource.

This research backs up figures released by payments association APACS which said that fraud online during the first 6 months of this year did not rise at the same level as the number of transactions online - fraudulent use of bank cards in internet, phone and mail order transactions between January and June rose by 5% over the same period of 2005. The actual losses from these cardholder not present transactions stood at £95.3m.

Emma Herrod