Home » Blog » Online Credit Card Fraud Still On The Rise

Online Credit Card Fraud Still On The Rise

By Brandi Cummings  -  July 17, 2008

We would like to think that as the Internet matures, we would be able to stamp down the fraudsters, scammers and spammers that have plagued it since it’s earliest days.  However, according to Javelin Strategy & Research’s “2008 Identity Fraud Forecast” report, Internet credit card fraud will continue to rise until at least until 2010. 

Javelin has also said that 3 out of 10 fraud victims have decreased their online shopping and that the potential for online fraud makes many others uncomfortable doing business online.  The continued rise of online credit card fraud is bad news to online merchants as well as customers.

The problems for online merchants are multi fold when it comes to dealing with fraud. 

  • Their fraud protection needs to be affordable.  Small businesses are especially in a bind here because their budgets are much smaller than that of a large company.
  • Small businesses are more likely to need fraud protection tools that can be easily integrated without the knowledge of a specialized IT department at their disposal.
  • Online merchants lose out on profits on all sides of the issue.  In 2007, $3.6 billion was lost to payment fraud committed on North American online merchants alone.  They also spent $780 million trying to stem the tide of losses they were incurring.  There are also untold profits lost due to a lack of customer confidence in buying online.

Customers looking to do business online also face a number of issues when dealing with online fraud.

  • They usually don’t know what kind of fraud protection is being used by the online merchant.  This leaves them feeling unsure about providing their credit card number and personal information.
  • It is becoming more difficult to differentiate between reputable and ill intentioned web sites.
  • If they have been duped before, they find it difficult to trust any online merchant again.

In the race between fraudsters and companies that do business online, two promising tools have emerged.  They both rely on identifying the customer’s commonly used devices such as their computers or their phones.  With computer and/or phone recognition (televerification) the online business can verify if the user is who they say they are by identifying the computer they are on or the phone number they are at.  Both Google and Craig’s List have turned to televerification.  They have found that by requiring user’s to supply a verifiable telephone number, they can reduce the number of ill intentioned users on their sites.  As well, online merchants that have incorporated televerification into their sites have found a decrease in fraudulent charges/orders on their sites, resulting in a reduction in dollars lost in chargebacks, less spent on manual screening of orders, and an increase in their bottom line.  They have also found that customer confidence in their site has increased due to the obvious fraud protection tools employed.

Online fraud is still on the rise.  What are you doing to protect your business and your customers?

Click here for your FREE White Paper: Reduce Fraud: Stop Fraudsters Before They Strike

Share it!

Filed under Blog » ReduceFraud.com™  •  Tags: , , ,

Reader Comments

Micheal says...July 17th, 2008

Wow!

Really it’s great to you, finding the new strategy on credit cards, I think it’s very useful for all.


Trackbacks / Pingbacks

  1. Pingback from Online Fraud Prevention - iovation - November 18, 2008
  2. Pingback from » Javelin Says Online Credit Card Fraud Will Increase Through 2010 iovation Blog - November 19, 2008


Got something to say?