Any company considering or selling online should read this report
The online retail industry continues to grow at a phenomenal rate with ever increasing revenues that make it an obvious target for fraud.
The Third UK Online Annual Fraud Report by CyberSpace® reveals findings, from surveying 150 online retailers who have discussed their experiences with online fraud, about how they defend themselves against crime. The result is a comprehensive study of all the key developments in online and mail order/telephone order (MOTO) fraud over the last 12 months.
The report covers topics that include expected online sales growth for 2007, main payment types offered in 2006, the issues that are likely to drive fraud increases in 2007, fraud management methods in 2006 and provides an overview of a range of tools for a cost-effective fraud management strategy.
Findings conclude that industry growth continues to outpace fraud. Respondents to the survey projected growth of over 20% over the last two years – this confidence is underpinned by reports from industry body the Interactive Media in Retail Group (MRG) which shows online sales growing at £50m/month for the first 10 months in 2006. One would believe that fraud figures would reflect a matching growth, but this does not appear to be the case – in cash terms maybe, but the levels of fraud as a proportion of their total business have remained static or has even fallen slightly.
This lack of growth in the fraud rate appears to be due to the pragmatic approach that online retailers are taking by deploying a wide range of sophisticated tools developed specifically for online media to manage and monitor fraud, although many do still utilise the costly manual review approach for both online and MOTO transactions. However, it is inevitable that would be fraudsters do and continue to find more sophisticated ways of cracking online retail security and it is critical for online retailers to stay a few steps ahead of the game.
This topic is discussed in depth in the report and includes information about the new Payment Card Industry (PCI) Data Security Standard which was passed in June 2005 which is aimed at helping online retailers manage potential fraud. Unfortunately, however, according to CyberSpace®, only 35% of respondents had started the compliance process, whilst 40% weren’t even considering complying which is obviously of grave concern, since the big credit card companies involved in setting the standard, such as MasterCard, for example, are planning to introduce fees for non-compliant merchants in June 2007. Other actions may include being banned from trading or organisations being left to soak up the costs of break-ins themselves.
To read the whole report please download: Third UK Online Annual Fraud Report by CyberSpace®
For information on Distance Selling Regulations (Business to Consumer only) please download here: Distance Selling Regulations – an overview of the rules