Fraud Hits E-Commerce for $3.6 Billion

• Posted: Monday, November 19, 2007
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• Author: pradhana
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• Filed under: e-Commerce, Online Services

US e-commerce will lose $3.6 billion to fraud in 2007, up 20% over 2006, according to a CyberSource survey.

Online merchants said they would lose an average of 1.4% of their revenue to fraud in 2007, the same as in 2006. However, since, e-commerce is growing, that represents an increase in dollars lost.

CyberSource said that about 1.3% of accepted orders in 2007 will turn out to be fraudulent, up from 1.1% in 2006.

More than 4% of online orders placed in the United States and Canada are rejected on suspicion of fraud.

CyberSource said that chargebacks may represent only one-half of the actual impact of fraud, since more merchants are spending time and money reviewing transactions for potential fraud.

Responding merchants said they were reviewing 27% of their orders this year for fraud, up from 23% in 2006. Three-quarters of those reviewed orders were approved as legitimate.

Merchants said that orders originating from outside the US and Canada were 2.8 times more likely to be fraudulent than those placed in-country. [eMarketer]

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