Study: E-tailers say fraud is a solvable problem

A new study of Internet retailers, or e-tailers, released Thursday by The Worldwide E-Commerce Fraud Prevention Network found that while nearly half of e-tailers surveyed say online fraud is a “significant problem,” the majority believe that fraud prevention steps can minimize risk.

The survey, which was conducted over the week of March 5 on the Network’s Web site, found that 50 per cent of those surveyed reported online losses from fraud of between US$1,000 and $10,000. Nineteen percent said they had lost over $100,000.

Of over 1,000 members of the Network, 140 took part in the survey. The largest number of respondents thought fraud was a “somewhat significant” problem (36 per cent), while only 10 percent found it to be the “most significant problem” and one percent said they never worry about it at all.

Regardless of how serious a threat e-tailers see fraud as, they are taking a variety of different measures to prevent it, and over 70 percent believe that such steps can minimize it, the study found. Seventy per cent use address-verification systems to fight fraud, 54 per cent follow up with their customers or use real-time authorizations and 43 per cent employ after-the-fact fraud management, also called post-process fraud management.

The most widely used tools correlated closely with the tools merchants said were most effective, with address verification listed as most effective by 68 per cent of those surveyed, real-time authorization by 52 per cent, card verification codes by 49 per cent and customized rules by 42 per cent.

The companies that responded to the survey are a diverse bunch in terms of revenue, with 45 per cent listing annual revenue of over $1 million, 20 percent making between $100,000 and $1 million and 35 percent reporting under $100,000.

The Worldwide E-Commerce Fraud Prevention Network is a trade group made up of companies that conduct e-commerce which aims to reduce fraud and promote e-commerce. Members include Inc., American Express Co., Expedia Inc. and PricewaterhouseCoopers LLP.

The Worldwide E-Commerce Fraud Prevention Network can be located online at

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Jim Love, Chief Content Officer, IT World Canada

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