Online fraud is under 0.5% for most merchants, says Merchant Fraud Squad
Most online merchants experience credit card fraud rates of less than 0.5% of annual sales, a survey of 368 merchants members of the Merchant Fraud Squad, an online fraud prevention and education group, shows. The survey reports that 72% of small merchants and 58% of large merchants experienced fraud rates of less than 0.5% of annual revenues while 17% of small and 20% of large merchants experienced rates grater than 1%.
The survey also shows that 71% of large merchants and 60% of mid-sized and small merchants believe online fraudsters have become more sophisticated in the last 12 months. Additionally, 47% agreed that online fraud is “one of the most significant problem we face.”
“The study reveals that online merchants view fraudsters as more cunning, but also that merchants are not sitting idle,” said Julie Fergerson, chair of the Merchant Fraud Squad and co-founder and vice president of emerging technologies at ClearCommerce Corp. “Our goal is to make sure merchants stay one step ahead of the curve and get their fraud rates even lower.”
The 2002 Merchant Fraud Squad reported that merchants are using the following methods of combating fraud:
--Address verification systems, 70%
--Customer follow-up, 63%
--Real-time authorizations, 61%
--Post-process fraud management, 51.
The survey also finds that most merchants are able to combat fraud for relatively low costs. 59% of large merchants, 51% of medium-sized merchants and 58% of small merchants report spending less than 1% of total revenues on fraud prevention. 8% of small businesses and 7% of large and medium-size business report spending more than 3% of total revenues on fraud prevention.
Of the merchants who took part in the survey, 42% listed annual revenues of more than $1 million, 28% listed revenues at less than $100,000 and 32% reported revenues of between $100,000 and $1 million.
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