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Experian says 97% of online retailers it surveyed in the U.K. have suffered from credit card fraud and 73% have received chargebacks from credit card companies as a result of fraudulent transactions.
Few online retailers are immune to credit card fraud, says a new survey from Experian, an information services company. Experian says 97% of online retailers that it surveyed in the U.K. have suffered from credit card fraud and 73% have received chargebacks from credit card companies as a result of fraudulent transactions.
The survey reports that more than two-thirds of retailers are selling over the Internet and 90% of them experienced increases in web-based revenue in the past year. Yet most retailers are devoting only 1% to 5% of their IT budgets to improving online security.
The Experian survey also found that in some cases, it takes retailers up to four weeks to be informed of a fraud. In 48% of those cases, a fraudster will use the site more than once before a fraud is detected.
“Despite this, some 28% of online retailers are still employing only manual fraud checks and many online retailers are still not using any external information to verify a customer’s name and address before authorising an online transaction,” said Gareth Jones, fraud products director at Experian.
The survey also reported that 80% of retailers believe customer authentication is an effective measure with over half of online retailers believing that online fraud is mainly preventable. In addition, 83% of retailers believe their online sales would increase if consumers were not concerned about fraud.
The research was conducted on behalf of Experian by an independent research company to establish the extent of Internet fraud and to identify the key issues and trends regarding Internet fraud for UK online retailers and finance providers. The survey consisted of a series of 60 in-depth interviews (30 interviews with online retailers and 30 interviews with finance providers) with the person responsible for risk management strategy, especially in relation to the problem of fraud conducted remotely.
Experian also found:
--66% of online retailers have experienced fraud through stolen credit cards, 43% through identity theft and 33% through card generators.
--57% of retailers believe the use of stolen credit cards is the fraud likely to pose the most serious threat in five years; identity theft, 27%; card generators, 12%.
--Almost 75% have reported Internet fraud to the police but in just 14% of cases was the fraudster convicted.
--83% of online retailers have a secure server.