February 22, 2010, 12:00 AM

Web merchants say international fraud rates fell to 2% in 2009, study says

U.S. and Canadian merchants say the percentage of their orders from abroad rose to 21% in 2009, up from 17% in 2008, according to a new study. The international growth dovetailed with fraud rates on international orders falling to 2% in 2009.

U.S. and Canadian merchants say the percentage of their orders from abroad rose to 21% in 2009, up 24% from 17% in 2008, CyberSource Corp. says in the “11th Annual CyberSource Survey of eCommerce Fraud-2009.”

CyberSource, which will be exhibiting at the Internet Retailer Conference & Exhibition 2010, conducted the survey in September and October.

The international growth dovetailed with fraud rates on international orders dropping from an average of 4% in 2008 to 2% in 2009. The domestic rate was 0.9%. The percentage of international orders that were rejected for suspicion of fraud fell 29% from 10.9% in 2008 to 7.7%. The domestic percentage was 1.2%.

Overall, merchants reported their online revenue loss due to fraud to be $3.3 billion, an 18% dip from 2008 when losses were estimated at $4 billion.

"We see this as a meaningful trend in e-commerce-real evidence of increasing globalization," says Doug Schwegman, CyberSource`s director of customer and market intelligence. "We think the trend was driven in part by merchants` needs to find new sources of revenue in a challenged economy, but also by merchants` growing ability to manage fraud on international orders."

To prevent fraud, 20% of the surveyed merchants stopped accepting orders from at least one country due to high fraud levels. Among merchants that stopped accepting orders, 50% blocked orders from Nigeria, 45% rejected orders from Ghana and 30% rejected orders from Indonesia and Malaysia.

For domestic orders, the survey found that 33% of merchants said that orders stemming from New York had the highest risk of any U.S. or Canadian city. 19% cited Miami and 10% said Los Angeles.

Paul Brock, CyberSource principal, will be speaking at the Internet Retailer Conference & Exhibition 2010 in a session entitled Criminals get slicker-and e-retailers will need to keep up.

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