Fraudulent 'card not present' (CNP) transactions over the internet increased by 68 per cent from £28m in 2002 to £45m last year, according to figures released by the Association of Payment Clearing Services (Apacs).

Total cases of CNP fraud, including transactions made by phone, fax and mail order as well as over the internet, increased by six per cent to £116.4m over the same period.

Many small online VARs lack the sophisticated security measures of larger retailers and are vulnerable to the growing CNP fraud menace, according to Apacs.

"We have done research into the risk to different types of online retailers that trade in a CNP environment and sectors such as IT software, hardware and telecoms are particularly affected," an Apacs representative warned.

As CRN predicted last year, there has been rapid growth in internet fraud, and Apacs is urging e-retailers and firms with e-commerce divisions to invest in safeguards for their transaction approval processes.

Alan Goswell, sales manager at reseller Leonardo Computers, whose firm was hit last year, said: "There were a couple of transactions I thought were suspicious because they had mobile numbers as contacts."

These orders were cancelled, but a colleague authorised two others that cost Leonardo £1,600.

"Once the thieves had got something out of us, they started to bombard us," Goswell added.

This experience prompted the firm to subscribe to The Early Warning Scheme, established 14 months ago by VAR Andrew Goodwill to collate the details of credit cards used fraudulently.

"This is a big problem because it is an easy crime to commit," Goodwill said. "You should look at reasons why you should not accept an order and check every order that comes through."

miya_knights@vnu.co.uk