Loss from Fake E-commerce Orders to Reach $3.6 Billion in ‘07
While the rates of online fraud remain steady, the loss from it rises with the growth in e-commerce and with more companies engaging people to separate out the fraudulent orders, according to the ninth annual e-commerce fraud survey by CyberSource Corp.
The risk-management and merchant processing firm's latest survey involving 318 Canadian and American retailers who sell goods online found that this year (2007), merchants were manually checking out on about 27% of the orders, an increase from 23% last year. For this checking, the retailers are hiring outside people. And so it has become easy to determine the mean size of suspect orders, which in 2007 is at $200, an increase from $120 during 2006.
Participants in the survey estimated that 1.4% of their sales on the Internet in 2007 are likely to be redirected to fraudulent sources. This percentage was found to be same as 2006.
CyberSource's Director of Market and Customer Intelligence, Doug Schwegman, noted that e-commerce in United States is an area that today yields high rewards and it is showing vibrant growth. But it is also an area full of challenges owing to systematic fraud, Schwegman added. TechNewsWorld published this on November 19, 2007.
The survey also found that the overall picture of loss is a bundle of mixed issues. It estimates that online merchants may lose around $3.6 Billion in total earnings on account of fraud in 2007. When this is compared to $1.3 Billion in 2006, the loss shows a 16% increase. What this implies is that the rate of dollar loss due to fraud is stable at 1.4% while the rate of orders that are accepted, which end up as fraud is 1.3% in 2007 compared to 1.1% in 2006.
It is therefore no surprise that merchants are increasingly putting up anti-fraud devices on their trading sites. These range from tools monitoring order velocity, i.e., those that identify suspicious orders, to IP geolocation tools that help to locate the origin of an online order. CyberSource's survey showed that 53% of the responding retailers employ about five fraud identifying software and the bigger retailing companies employ about eight.
Related article: Loss from Internet Banking Fraud up 14% in 2009
» SPAMfighter News - 04-12-2007