Online retailers hit hard by fraud in 2008

Four out of 10 UK retailers saw increased fraud levels last year

One in eight UK online retailers suffered losses from fraud in the past year amounting to more than five per cent of total revenues, according to the fifth annual UK Online Fraud Report from secure payment provider CyberSource.

Some 40 per cent of merchants saw fraud levels increase in the past year, while theft of customer data became the top concern for e-commerce firms for the first time.

Around 52 per cent of online retailers rated data theft as the greatest business threat in this year's survey, compared with just six per cent in the previous year.

"It is particularly worrying to see that this trend is not being pushed back, " said CyberSource managing director Simon Stokes. "And, when you put it against the backdrop of the current financial crisis, no-one can afford to lose revenue in this climate."

There has been continued investment by merchants in tackling the fraud problem, and approximately 16 per cent of UK merchants adopted the Verified by Visa and MasterCard SecureCode authentication schemes last year. But many rely too heavily on expensive and inefficient manual processes, according to Stokes.

"Of all the manually reviewed orders, 72 per cent were accepted, showing a [high false positive rate] and that the whole area needs to be more automated," he said. "The more of the process, both front-end and back-end, that can be automated, the better."