January 6, 2005, 12:00 AM

More e-retailers conducting manual order review to identify fraud

More merchants are manually reviewing a larger percentage of online orders as part of fraud-prevention programs, but the rate of order acceptance is also rising, CyberSource reports.

Kurt Peters

Executive Editor

 

Despite the options for automated order reviewing available to online retailers, more merchants are manually reviewing a larger percentage of online orders as part of fraud-prevention programs. But the rate of order acceptance is also rising, CyberSource Corp. reports in its 6th Annual Online Fraud Report.

73% of online merchants manually checked orders in 2004, up from 65% in 2003, growth partly attributed to corresponding year-to-year in the number of online orders, which rose 25-30%, the report says.

But merchants are also manually reviewing a higher percentage of orders–27% in 2004, up from 23% in 2003 and 16% in 2000, the report says.

The increase in manual reviews has coincided with a higher percentage of accepted orders. Merchants accepted 72% of reviewed orders last year, up from 66% in 2003, the report says. “This may indicate merchants have room to improve the processes and systems they use to determine which orders require manual reviews,” CyberSource says.

The report also found, however, that only 21% of online merchants last year said they could afford to increase the size of their manual review staffs in 2005.

The report, based on a survey of 348 online merchants last fall, also found that revenue loss due to payment fraud rose 37% last year to $2.6 billion, up from $1.9 billion in 2003.

 

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