Based on a survey of 404 US merchants, CyberSource reported that during 2005 the rate of fraud associated with overseas orders was double the overall average and that the number of international orders merchants rejected was triple the overall average.

While ecommerce becomes increasing automated, it also appears that merchants are getting wiser and increasingly using manual order review techniques.

Key findings from the survey:

- 73% of merchants are manually reviewing orders

- The use of CVN (Card Verification Number) as fraud screening strategy has risen from 44% of online merchants in 2003 to 66% currently.

- The average rate of manual review by merchants is in excess of 33% of orders

- Respondents stated that they accepted over 66% of orders they manually reviewed

- 22% of respondents stated they are interested in using card association payer authentication services such as Verified by Visa in 2006 as a new tool to further decrease fraud.

A very interesting point emerging from the survey shows that chargeback data from banks is by no means an accurate benchmark in relation to fraud. According to the report, chargebacks accounted for less than half of fraud losses. In most instances the client contacts the merchant directly and is refunded before it gets to the stage of a chargeback being submitted. Fraud is a pain in the butt however it’s reported, but I’m sure most merchants prefer contact from the client as it cuts down on the costs of fraud, i.e. exorbitant chargeback fees and possibly incurring higher transaction costs in future as a penalty if the cardholder chooses to submit a chargeback first.

Read more of the CyberSource online fraud report

Learn more about fraud screening