Document Actions
January 15 2008
Online fraudsters focus attention on large merchants
Large UK retailers are seeing more sophisticated criminal tactics while smaller merchants are subject to random attacks
Research conducted for the fourth annual CyberSource UK Online Fraud Report has shown that criminals are becoming more sophisticated and are focusing their attention on high-value wins from larger merchants. Meanwhile, small merchants are being targeted with simpler approaches that rely more on luck than ingenuity to succeed.
According to the survey 42% of large merchants say they recognised fraudsters targeting specific products that could be easily sold and 25% documented fraudsters testing and exploiting 'ceiling' and 'floor' limits for transactions, outside of which purchases are more likely to be reviewed before approval. By contrast, only 23% of small merchants saw specific product targeting, and only 3% recognised the practice of testing ceiling and floor limits.
Small merchants are subject to many more attempts by fraudsters to use card generators - software that generates possible card numbers against a specific set of customer data. 48% recognised this type of fraud versus just 22% of large merchants. Small merchants also saw a higher incidence of multiple identities being tried against a single card number (42% vs 31% for large merchants). Both of these exploits rely on luck and multiple attempts to succeed, and are much less deliberate and planned than those tactics experienced by larger merchants.
"This year's report shows that online retail fraud has reached a level of sophistication where we can recognise different patterns of behaviour and different targets for 'professional' and 'rookie' fraudsters," said Simon Stokes, managing director of CyberSource
Nearly half of all businesses have seen fraud levels rise in the last twelve months; 38% have seen them stay static. Large and very large merchants have been hit hardest: over a quarter have recorded losses up more than 10% on last year.
Just 17% of overall respondents agreed that the police are effectively tackling online retail fraud today.
"Online retail continues to grow at a phenomenal rate, and the infrastructure to support it cannot always keep up," commented Jo Evans, managing director of the Interactive Media in Retail Group (IMRG). "At the moment law enforcement policies and practices may be lagging behind but as an industry we also need to look at ways that we can work together more effectively to tackle the issue of fraud."
Merchants of all sizes have typically implemented between five and six different lines of defence, comprising simple checks on addresses (Address Verification Service or AVS) and card details (Card Verification Number or CVN), as well as more sophisticated tools including rules-based automated decision engines.
Subscriptions