Fraud level increases along with fraud costs

The survey conducted by Vanson research group among 150 online merchants has shown that one out of eight businesses in UK have suffered from fraud acquiring losses of more than 5% of total online revenues in.  

Overall, the rate of fraud in 2008 has increased 2.6%. It should also be noted that the cost of fraud cannot be measured only in direct losses, more than one fifth of merchants have reported to be rejecting over 5% of orders on suspicion of fraud, some of which are likely to be valid. Moreover, merchants have to implement various anti-fraud tools and employ/outsource staff or for using those, consequently, bearing more costs. 

Dr. Akif Khan, co-author of the Fraud Report and the head of client and technical services of CyberSource Ltd., noted that although government is willing to assist merchants in fighting fraud, "merchants' principal protection will, for the most part, remain the tools and programs that they can assemble in their defense." 

The most popular anti-fraud investment in 2008 have been the addition of support for the Verified by Visa and MasterCard SecureCode schemes with 16% of merchants using them. Altogether the users of those programs now make 60% of UK. 

Besides, the report has provided that many merchants still rely on manual reviewers, 10% of them review every order. Dr Khan, however, highlighted this was an expensive and inefficient first line tool. "With margins under pressure in today's challenging economy, merchants should be looking to improve the use of automated fraud screening processes so that they only need to review those orders that are flagged as suspicious. This could have a significant impact on the cost of managing fraud," he added.