Online retail fraud bites as security costs increase

Online retailers continue to lose more money from fraud, while some companies still rely on checking transactions manually.

Online fraud has taken a bigger bite out of internet retail revenues in the last year, with 40 per cent of merchants seeing their rate of fraud loss increase.

This was according to figures from the fifth annual CyberSource UK Online Fraud report. One in eight businesses suffered fraud losses in excess of five per cent of their total online revenues, while rates of loss which were more than one per cent of revenue were increasingly common.

Advertisement - Article continues below

Overall the rate of fraud increased by 2.6 per cent, but the cost of fraud could not be measured in direct losses alone more than a fifth of merchants rejected over five per cent of orders on suspicion of fraud, with some of these orders likely to actually be valid.

Retailers also had to deal with the costs of various anti-fraud tools, as well as having to employ new staff or outsource new service providers.

Dr Akif Khan, co-author of the fraud report, said in a statement: "There are hopes for promising new anti-fraud developments coming from government.

"But even with this kind of support, the merchants' principle protection will for the most part, remain the tools and programmes they can assemble in their defence."

Advertisement - Article continues below

The report described some of the anti-fraud schemes that retailers had invested in to tackle the problem of fraud.

It showed that support for Verified by Visa and MasterCard SecureCode had been the most popular, with 16 per cent of merchants integrating them in 2008.

Advertisement - Article continues below

Around 60 per cent of UK merchants employed these services. Surprisingly however, 10 per cent of merchants still used manual reviewers to identify fraud.

Dr Khan warned that manual reviewing was both expensive and inefficient, especially in the challenging economic conditions of today.

He said: "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."

Featured Resources

Navigating the new normal: A fast guide to remote working

A smooth transition will support operations for years to come

Download now

Putting a spotlight on cyber security

An examination of the current cyber security landscape

Download now

The economics of infrastructure scalability

Find the most cost-effective and least risky way to scale

Download now

IT operations overload hinders digital transformation

Clearing the path towards a modernised system of agreement

Download now



University of California gets fleeced by hackers for $1.14 million

30 Jun 2020
cyber security

Australia announces $1.35 billion investment in cyber security

30 Jun 2020
cloud security

CSA and ISSA form cyber security partnership

30 Jun 2020
Policy & legislation

Senators propose a bill aimed at ending warrant-proof encryption

24 Jun 2020

Most Popular


How to find RAM speed, size and type

24 Jun 2020

Microsoft releases urgent patch for high-risk Windows 10 flaws

1 Jul 2020
data protection

EU institutions told to avoid Microsoft software after licence spat

3 Jul 2020