US online credit card fraud costing US consumers $1.8Bn a year
By Canadian SecurityNews Retail
Fraudulent use of credit cards, the biggest area of online loss for many US retailers, is up by 12% since last year, an industry survey has revealed.
Launched at the first Retail Fraud – New York conference, the US Retail Fraud Survey 2015 has reported a substantial increase in online credit card fraud.
Published by Retail Knowledge and sponsored by intelligent cash handling experts Volumatic, the survey, now in its third year, is the most extensive report into the systems, processes and strategies of 100 of the US’s top retailers.
The biggest area of online loss remains, overwhelmingly, from the fraudulent use of credit cards (66%), that’s an estimated $1.8Bn cost to retailers. However, this is a multi-billion dollar problem for consumers as well as retailers, because ultimately the cost of fraud is recouped through increased prices in the stores.
The latest report shows that, currently, online sales account for an average of 6% of sales. In the next three years retailers are estimating to achieve 15% of sales to be made online. Considering this anticipated rise in online sales and the dramatic increase of online credit card fraud, the role of online fraud prevention will be even more important. Loss Prevention executives will increasingly need to look at protection across all sales channels, not just the stores.
Paul Bessant of Retail Knowledge, said: “In light of recent data breeches throughout the last 12 months, it is no surprise that credit card fraud is up again this year. However, what is concerning from the Survey is that whilst retailers spending on online fraud prevention has doubled in the last 2 years, 58% of them are still more concerned about the ability of monitoring and analytics to deal effectively with the fraudsters, by indentifying and stopping them, than anything else.”
James Harris of Volumatic, the US Retail Fraud Survey sponsor, commented: “An estimated cost of £1.8billion in fraudulent credit card transactions is a heavy burden for the retail market to bear. If retailers’ estimates of online sales growth are correct, from an average of 6% of total sales to a figure of 15% in North America, then this cost to retailers (which is ultimately borne by consumers) is going to grow exponentially.
“Experience from other markets shows us that criminals are becoming increasingly sophisticated in this type of fraud and that they find the anonymity and remoteness of online shopping an attractive environment in which to apply their resources. Whilst it remains to be seen whether the introduction of Chip and Pin technology adds to, or diminishes the issues that retailers face when dealing with electronic payment instruments, of one thing we can be sure. The criminal fraternity will be looking to exploit any weaknesses, as these new technologies are adopted.
“And perhaps the disturbing trend revealed in this survey may cause retailers to pause and reflect on the stark contrast between the multitude of activities and costs associated with managing and combating credit card and electronic payment fraud, compared to the simplicity of transacting in cash for the vast majority of retail sales.”
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