The most recent iteration of CyberSource’s annual ecommerce fraud survey shows that North American merchants selling goods and services online have reduced the rate of fraudulent orders online while also losing more dollars to fraudsters successful in their schemes. The survey shows that merchants involved in the survey lost $3.4 Billion in online revenue, equating to a full 1% of total online revenue. This is a slight degradation from 2010, when ecommerce merchants managed to continue the trend of shrinking their fraud dollar volume and losses to $2.7 billion and 90 basis points of total online revenue.
The overall picture: merchants are making gains against fraud but the battle continues. The fraud rate by order (the percentage of orders that turned out to be fraudulent) dropped from 0.9 percent in 2010 to 0.6 percent in 2011—the lowest in the 13 year history of the survey. But the cost of combatting fraud continues to grow. Dollar losses were up, manual review continued to climb, and merchants reiterated their concern that fraud is becoming more difficult to detect. 27 percent of respondents said they are engaged in mobile commerce and initial indicators regarding fraud in that channel are promising.
“The continued growth in eCommerce is a welcome development for merchants and the economy overall,” said Andrew Naumann, CyberSource Senior Business Leader, Fraud Management Solutions. “The bad news is that fraudsters took in a higher dollar volume, the first such increase we’ve seen since 2008. Our study shows merchants are working harder than ever to keep fraud in check, using more tools and reviewing more orders. Clearly the criminal element is growing more sophisticated.”
The press release contains additional details of the findings and a link to download the report (registration required).