May 30, 2008, 12:00 AM

The many ways to deal with online payment fraud

It’s an ongoing saga. CyberSource reports the latest efforts by e-retailers to keep fraud at bay.

Internet Retailer

Although online payment fraud as a percent of online revenue has shrunk to less than half of what it was several years ago-falling to 1.4% in 2007 from 3.6% in 2000-the value of fraudulent e-commerce transactions continues to increase along with the overall rise in e-commerce-rising to $3.6 billion last year from $1.5 billion in 2000-according to the 9th Annual Online Fraud Report from CyberSource Corp. So there’s still plenty of value to be recouped by taking steps to keep fraud to a minimum. The report, based on data from 318 online merchants, notes more than 15 fraud-management tools and strategies-but with a few surprises. For example: While address verification is the most widely used, by 80% of respondents as of last year, only 29% put it among their most effective tools. And the relatively new “out-of-wallet” buyer authentication systems, which request information not typically found in a stolen wallet like a mother’s maiden name, are rated among the most effective though used by only 6% of respondents.

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