Fewer Resources Resukt in More Higher Online Fraud
UK merchants could suffer an increase in online fraud over the coming year as they struggle to process more orders with the same or fewer resources, according to the latest annual UK Online Fraud report from Visa subsidiary Cyber Source.
The payment management firm interviewed online merchants of all sizes and found that, while 77 per cent expect e-commerce to grow in 2011, 59 per cent said that fraud prevention budgets will remain the same while 10 per cent said they will decrease.
In addition, fraud levels rose last year to 1.9 per cent of all orders compared to 1.6 per cent in 2009.
"Most critically, the budget is falling in the area of manual review, which tends to be the most costly part of fraud management," said Cyber Source director and report author Akif Khan.
"So we're in a situation where merchants are manually reviewing one fifth of transactions, and are expecting a high volume of revenue, but they're not expecting any increase in staff levels."
Khan urged companies to improve their automated fraud screening software to take the load off manual review staff, and to employ case management software to make the manual review process more efficient for those tasked with spotting fraud.
The report also highlights the dangers of expansion into international markets, despite the fact that 60 per cent of respondents accept orders from abroad.
Nigeria and Ghana were identified as the most likely sources of fraud, but surprisingly the US came third.
Cyber criminals are becoming increasingly sophisticated in the ways they can imitate real transactions, and companies need to have the right staff and tools in place to mitigate the risks of international fraud, warned Khan.
"You need to have some staff who have the local knowledge, and ensure that your tools are appropriate to the geography, for example address validation, electoral roll checks and phone number validation," he said.
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