Criminals will steal about $3 billion this year from U.S. e-commerce sites, up 7% from $2.8 billion in 2005, though the percent of e-commerce revenue lost to fraud will dip to 1.4% from 1.6%, marking the third straight year of such declines, CyberSource reported today in the “8th Annual Online Fraud Survey.”
E-commerce operators, meanwhile, are becoming more efficient in reviewing orders to prevent fraud, says Doug Schwegman, director of customer and market intelligence for CyberSource. “We’ve seen reviewer productivity rise this year to an average of 29 per hour from 22 last year,” he says. Among merchants that review orders, meanwhile, 28% of orders are reviewed manually, down from 35% in 2005.
37% of merchants are using from 5 to 9 fraud-prevention tools, up from 28% a year ago, while 10% use 10 or more tools, up from 7%, Schwegman says, adding that most tools in a list of 14 are showing increased usage this year over last. Tools showing the largest increases in usage include systems that show the IP geolocation of a potential criminal’s computer, the monitoring of order velocity, the useage of approved lists of customers, and address verification.
Tools new this year include device fingerprinting, which can reveal the type of computer someone is using to access a web site so it can compared to computers used in other fraudulent transactions, and “out-of-wallet” challenges, which use a consumer’s personal data outside of credit card account information—a spouse’s mother’s maiden name, for instance—to authenticate the person attempting to use a credit card.
The only tools that showed no increase in usage this year were Visa’s Verified by Visa and MasterCard’s SecureCode security features, which require shoppers to enter a personal code number tied to their credit card account when making an online purchase. “But when we asked merchants what they were planning to look in the next 12 months, most said Verified by Visa and SecureCode,” Schwegman says.
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