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Online Retailers Incur Heavy Costs Due to Cyber Fraud

Online retailers are incurring expenses worth $1,146 million per annum due to cyber crime. And within next three years, it is possible for this figure to go up to $3 billion, according to 3V Transaction Services. Given this, a little more than a fourth of retailers believe that fraudulent activity on the Internet is getting ugly.

In its study, the pay-as-you-go voucher firm along with Interactive Media and Retail Group, or IMRG (the online retail industry group) found that 64% or two-thirds of online retailers had been prey to online fraud that is costing them around 5% of their yearly turnover, as reported by Citywire on May 15, 2007.

There is continual evolution of phishing attacks making this type of cyber crime more prolific. Fraudsters are developing new techniques and know how to refine them fast in order to remain ahead of online banking customers and the security community.

According to Andrew McClelland, Director of projects and marketing at IMRG (Interactive Media and Retail Group), the results from research by 3V shows how seriously Internet fraud activity confronts the online retail industry. As the industry expands, it becomes a lucrative target for cyber criminals. Citywire published this as news on May 15, 2007.

Retailers understand that a number of tools and techniques provide the necessary protection from fraudulent activity but that shouldn't result in increased cost or creation of problems for legitimate customers, McClelland said.

Although phishers first target banks, credit unions, and other financial institutions, an increasing number of retailers on the Net like PayPal, eBay, and Amazon too have become easy targets for phishing attacks.

PIRT (Phishing Incident Reporting and Termination) team reported in end week of April 2007 that many banks have responded favorably to its initiative to reduce phishing attacks. After banks, phishers target online financial services company PayPal, while eBay is the next largest target. Banknet360 published this in news in the end week of April.

IMRG's survey involved 200 members. It showed that 36% of retailers suffered some form of online fraudulent activity especially since chip and pin entered the market system. 64% of retailers talked about enhancing their website security.

Related article: Online Card Fraud Shows Greater Tendency Than Chip and Pin

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