Fraudulent orders are increasing
Businesses operating through websites have been warned that nearly two per cent of all transactions result in fraud, following the publication of new statistics.
Companies ‘hit with 2% fraud rate on transactions’
Tuesday, January 18 2010 by John Burns
UK sellers using website promotion to boost sales abroad have been warned that fraud is a major issue and can impact on takings, following the publication of an annual fraud survey.
CyberSource, a Visa credit card affiliate, revealed in its seventh UK Online Fraud Report that fraud is getting worse, despite takings through website emarketing improving.
It explained that key fraud metrics are highlighting how online payment systems are experiencing an average of 1.9 per cent of orders turning out to be fraudulent, marking a 0.3 per cent rise on the 1.6 per cent measured in 2009.
Despite this, and partially due to increased spending on social networking and other managed emarketing projects, 59 per cent of respondents expected their fraud management budgets to stay flat in 2011.
Merchants are regularly expanding to new territories and nearly 60 per cent of UK sellers now accept online orders from abroad, CyberSource explained. Despite this, survey respondents speaking on sources of fraud ranked the US third, behind Nigeria and Ghana, as the likeliest source.
Co-author of the Fraud Report Dr Akif Khan said while online growth predictions for trade are exciting for businesses looking to maximise their popularity with internet marketing consultants, organisations must address any vulnerability to protect themselves from further fraudulent claims.
He said: “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.
“Expanding into new geographies can be very attractive from a revenue perspective. However, merchants need to exercise due diligence and arm themselves with the right anti-fraud tools.”
In January, the US Department of Homeland Security succeeded in pinning down a credit card fraud ring within the country, arresting two Vietnamese foreign exchange students who have since been charged with carrying out fraudulent activity that extorted millions of dollars from businesses.
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