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Online fraud to rise, then decrease

Posted by Michael Bloch in ecommerce (Friday May 30, 2008 )

Over 2.3 million US consumers fell prey to fraudsters who made online purchases with their credit card details last year and that number is set to rise to 2.7 million in 2010.

The “2008 Identify Fraud Forecast” report from Javelin Strategy also predicts the number to begin to *drop* after 2010 as online merchants implement better tools to detect and intercept fraudulent orders. The report states that online purchase fraud amounted to 28% of all U.S. identity fraud during last year, but will rise to 39% of such fraud by 2013 as offline and wire fraud become less common.

Fraud certainly scars consumers according to Javelin, with 30% of fraud victims stating they have decreased their online shopping since their details were compromised.

Stopping fraud in a business where you have a high number of transactions is certainly a huge challenge, but one that needs to be met as the costs of not doing so can really chew into your bottom line – it’s not just the chargeback fees, but the time spent in dealing with such incidents. Even worse is the possibility of losing your merchant account if your chargeback rate is too high – you then have a black mark against your business name and gaining another account will likely be harder and more expensive.

Online merchants are very much at the mercy of the banks, with many institutions being particularly aggressive when it comes to merchants who predominantly process card-not-present transactions, as is the case in ecommerce.

Pick up some fraud screening tips.


Preventing and challenging chargebacks


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