e-Commerce Report Highlights Fraud Spots
Online fraud against U.K merchants has reached critical levels that have forced many to refuse orders from certain countries, with Nigeria, Ghana, and the U.S. heading the list, According to a new e-commerce report released.
According to payment company CyberSource's annual fraud analysis of 200 companies, 55 per cent of U.K. companies questioned refused to ship to Nigeria at all, ahead of Ghana on 34 per cent, and, surprisingly, the U.S. on 25 per cent.
Of digital-only companies (i.e, those shipping downloadable goods as opposed to physical ones) Nigeria came out at the top of the blacklist, with 47 companies avoiding it ahead of Vietnam, China, and South Korea on 29 per cent each, and the U.S. on 24 per cent.
The average fraud rate is now 1.6 per cent of orders, down from 1.8 per cent in 2009, with digital retailers suffering the highest rates overall. Rejection rates for online sales are now 5 per cent.
Possibilites causes are limited means at the disposal of digital retailer when it comes to fraud detection. As a physical retailer has longer to fulfill an order which allows for fraud detection systems such as manual address checking. CyberSource's report co-author, Dr Akif Khan said:"The absence of physical products creates a different eCommerce environment for digital goods merchants and as a result, they experience their own set of fraud management challenges.
"Their geographically diverse customer base requires the adoption of more sophisticated tools, like device fingerprinting, to help identify instances of cleaner fraud; ultimately detecting more fraud, first time," he said.
This leads online retailers toward using automated fraud detection systems, with the most popular used by all sectors being external systems such as Verified by Visa and MasterCard's SecureCode, as well as checking a credit card's CVV number. Nineteen per cent of vendors currently used IP geo-location to assess where an order is being placed from.
In the coming year, 11 per cent of those questioned said they would start using external screening agencies for some of the checking process.
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