Retailers call for help to combat online fraud

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More sophisticated criminal tactics have resulted in as much as 10 per cent rise in online fraud among larger UK retailers last year, a new fraud report has found.

But, while an increasingly global marketplace and growth in online shopping is delivering record sales, retailers are frustrated with the lack of co-ordination from government and the payments industry in tackling the growth of cyber fraud.

According to the fourth annual online fraud survey by transaction security specialist CyberSource, only 17 per cent believe law enforcement agencies are effectively challenging online fraud, proving a key area of merchant frustration. Police responses were limited to providing crime reference numbers and explaining their lack of resources and not following up on 'tip-offs' of addresses where retailers knew fraudulent activity was taking place.

It also said some of the 165 UK retailers surveyed by independent researcher Vanson Bourne complained about the quality of information from the card schemes and acquirers as well as a lack of interest and inconsistent approach from the police.

"The suggestion from some is for a single, independent body to track organised fraud efforts, share information, direct police efforts, liaise with the card schemes and lobby the government on improving policy," the report said.

Mark Bowerman, a spokesman for payments body Apacs told IT PRO: "The call for a single body in the report is actually very similar to remit to the National Fraud Reporting Centre due to be launched by the Met Police in April 2009."

At the same as 76 per cent of the businesses surveyed have experienced growth in the last twelve months, of which 38 per cent had increased revenues by more than 20 per cent, the average midsized retailer (£1-10 million in annual online revenue) was spending up to 60 per cent more on investments to manage fraud.

The key anti-fraud tools remain the Address Verification Service (AVS) and Card Verification Number (CVN). But more than 70% of merchants now support Verified by Visa and MasterCard SecureCode, with a large increase in uptake in the past twelve months.

Simon Stokes, CyberSource managing director told IT PRO retailers were calling for an industry response to match the growing sophistication and determination of the fraudsters.

But Stokes added: "These fraudsters are very, very organised, sharing kits and information online, in real time. Where merchants are seeing their businesses compromised by fraud, they need help to configure their online channels to combat it."

Nearly half (42 per cent) of large merchants (with over £10 million online annual revenue) said they recognised fraudsters targeting specific products that could be easily sold.

And 42 per cent of small retailers (compared to 31 per cent for larger ones) saw a higher incidence of multiple identities being tried against a single card number, for example.

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