Online retailers still reject too many international orders, study finds
Online orders are more than twice as likely to be fraudulent when placed from outside the U.S. and Canada, but retailers reject seven times as many good foreign orders than bad ones, CyberSource Corp. reports in its 8th Annual Online Fraud Survey.
“More retailers are turning to global markets, even though there’s greater fraud risk,” says Doug Schwegman, director of customer and market intelligence. CyberSource. notes that 61% of merchants accept orders from outside the U.S. and Canada, and that those orders represent 17% of their total order volume.
But 2.7% of online orders from outside of the U.S. and Canada are expected to be fraudulent this year, up from 2.4% last year, compared to 1.1% this year and 1% in 2005 for all orders, the study says.
Guarding against fraudulent international orders, however, is causing many retailers to reject far more orders than is necessary, the study says. Merchants are projected to reject 12.7% of orders from outside the U.S. and Canada this year, up from12.3% last year, resulting in a rejection rate more than five times the rate of actual fraud.
One way merchants are trying to bridge the gap is through increased use of risk management tools like IP geolocation tools, which help to check whether someone attempting to make a transaction is in a particularly high-risk area.
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