Fraud management budgets to remain 'stagnant'

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Fraud could be an increasingly big problem for companies, as many firms prevention budgets look likely to remain stagnant in 2011.

More than three-quarters of organisations responding to a CyberSource survey said they expected online revenues to increase in 2011.

Yet the signs are not so encouraging when it comes to fraud, as 1.9 per cent of orders accepted in 2010 resulted in fraud, up from 1.6 per cent in 2009.

Furthermore, the majority of respondents said they expected fraud management budgets to remain stable in 2011.

Not only will budgets stay flat for spending on management systems, but on related personnel as well, the report indicated.

One in 10 said they expected to have less money to spend on managing fraud in 2011.

“As organisations look to drive more online revenue, it is vital that they address any vulnerabilities to protect themselves from fraud,” said Dr Akif Khan, director for products and services at CyberSource.

“With the majority of merchants not allocating any additional budget to manage the issue, businesses should focus on designing sustainable strategies that not only reduce fraud losses, but streamline the entire process.”

In more encouraging signs from the report, a third of respondents said they believe losses from fraud would not increase this year.

Firms also appeared to have recognised the cyber crime issue, with more than half (59 per cent) ranking online fraud as the greatest business threat.

Systems uptime was named as one of the top two business concerns as well.

“To capitalise on the eCommerce opportunity, businesses should focus on streamlining internal fraud management processes,” Dr Khan added.

“Improving automated detection and bolstering case management can help reduce the inefficiencies and enable merchants to make more accurate decisions.”

In a geographical breakdown, respondents ranked Nigeria and Ghana as the most likely sources of fraud, with the US in third.

Almost 60 per cent of UK merchants now took online orders from abroad, the report found.

“Expanding into new geographies can be very attractive from a revenue perspective,” Khan added.

“However, merchants need to exercise due diligence and arm themselves with the right anti-fraud tools.”

Fraud cases hit record levels in 2010, according to KPMG research.

Added up, the value of the cases came to £1.374 billion, of which criminals tried to steal £571 million from public funds.

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