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Online Fraud Rises

Aug 1, 2008

More consumers are being victimized by fraudulent use of their credit and debit cards to make online purchases, according to research firm Javelin Strategy & Research. The firm's study asserts such crimes will increase through 2010 before tapering off.

Last year, 2.3 million consumers were the victims of online purchase fraud, and that number will increase to 2.7 million in 2010. The trend will then turn downward to 2.4 million in 2013, predicts Rachel Kim, a Javelin analyst, in her report, "2008 Identify Fraud Forecast."

Online fraud will decline as more merchants follow the lead of large eRetailers, such as, in beefing up their security systems, Kim says. One method she highlights is device recognition, which identifies when a consumer is using a computer that he or she has not used before to access the eCommerce site, prompting the retailer to ask for additional proof of identity.

Kim also pointed to the Verified by Visa and MasterCard SecureCode security systems, created by the card brands, to better authenticate consumers in eCommerce transactions. She noted that consumer adoption has been slow, and encouraged online retailers to offer incentives to customers who take part in these security programs.

Fraud does have an impact on consumers' willingness to shop online, according to the Javelin report. Nearly a third of fraud victims said they have decreased their online shopping, while only eight percent have increased it, and 62 percent said they have not changed, according to the study.

Javelin's research indicated that online purchase fraud represented 28 percent of all U.S. identity fraud in 2007, and will steadily increase to 39 percent of such fraud by 2013 when stronger security measures put a crimp in offline card fraud and wireless telephone fraud. Total identity fraud will decline from $45 billion last year to $34 billion in 2013, Javelin researchers predicted.

Topic: Wholesale News

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Article ID: 708

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