Online fraud decreases

New report finds that the level of fraud relative to spending online has fallen.

The level of online fraud appears to have fallen in relative terms, according to new research.

The UK Online Fraud Report 2007 said that when calculated as a proportion of revenue the cost of fraud had stalled or even fallen for 84 per cent of online retailers. And even when calculated as a total sum, two thirds of these companies had managed to keep losses at or below their 2005 levels.

The survey of 150 UK retailers by secure electronic payment provider Cybersource found that revenue from online sales had outstripped losses from fraud.

It said the fact that levels of fraud have not risen in line with the industry is a testament to the effort and resource applied by businesses and the wider industry so far. "But companies need to remain vigilant and look at new ways of preventing and managing fraud if this trend is to continue," the report's authors said.

Last year most retailers were worried that the introduction of Chip-and-Pin would drive fraudsters from high street stores and towards online crime. This year, while retailers expect an increase in online fraud, one major concern for them is identity theft with 68 per cent of respondents indicating this as a factor.

But survey also found that 56 per cent of retailers thought that industry authentication tools, such as CVN (Card Verification Number), Verified by Visa and MasterCard SecureCode, would drive fraud down. The research also found that 27 per cent thought that PCI compliance is limiting loss of credit card details to criminals.

"Over the last eighteen months the spike in online fraud that was expected as a result of the introduction of Chip-and-Pin on the high street has not materialised," the report said.

"Again this year it is a widely publicised topic that is causing concern: identity theft. Only time will tell if this proves to be more than just another scare. However, catching fraud committed with a genuine card and a seemingly genuine identity is certainly a major challenge."

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