US: online fraud costs e-retailers USD 3.5 bln in 2012

However, according to the 2013 Online Fraud Report by global payment services provider CyberSource, the estimated loss of USD 3.5 billion is down from the recent highs of USD 4 billion in 2008 and USD 3.7 billion in 2007.

The same source unveils that the average fraudulent online order ticket value has dropped 20 percent to USD 200 in 2012 from USD 250 in 2011. By comparison, the average valid orders ticket value has decreased to USD 149 in 2012 from USD 150 in 2011.

With regard to the percentage of fraudulent orders in the context of total revenue, the study points out that the average online fraud rates remain relatively low. The average percentage of online revenue lost to fraud was 0.9 percent in 2012, down from 1.0 percent in 2011. Furthermore, the average percentage of online orders that proved fraudulent last year was 0.8 percent, up from 0.6 percent in 2011, but down from 0.9 percent in 2010.

Findings also unveil that in 2012, mobile commerce has registered a higher rate of revenue lost to fraud, 1.4 percent. The report mentions that mobile devices are subject to many of the same threats that hit computers, including malicious software, or malware, that can enter a device through e-mail or other means and steal credit card account data and other confidential information.

Taking into account the fact that e-commerce sales are projected to grow 12 percent in 2013, according to data from research firm eMarketer, the CyberSource report reveals that less than a quarter of retailers are expanding their risk management spending. 73 percent of respondents have declared that risk management budgets would remain the same in 2013, while 4 percent have mentioned they would decrease their budgets and 23 percent have said they would increase them. For average spending allocations, the report finds that companies will spend 52 percent on order review staffs, 29 percent on third-party risk management tools and 19 percent on internal tools.

Respondents reported using an average of 4.9 fraud management tools, such as fraud-scoring calculators that rate an order’s level of risk by looking at data such as order value and past fraud associated with a card account number and device fingerprinting that identifies computing devices associated with past fraud.