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Online retailers are increasing expenditure on anti-fraud measures but lack support from government and law enforcement authorities, according to a new study.

Cybersource's latest UK Online Fraud Report (pdf) surveyed 165 UK businesses and 1000 consumers on methods being used to combat online fraud, as well as attitudes towards the issue.

Retailers lamented the lack of a coordinated anti-fraud strategy and complained about the lack of useful information from banks and card companies, as well as a perceived lack of interest from the police.

This is an issue that was touched upon by last year's House of Lords online fraud investigation, which criticised the authorities' lack of action on the issue.

Only 17% of retailers surveyed believed that the police were "effectively challenging online fraud".

The police are unable to investigate every instance of online fraud, and are unlikely to get involved in many smaller cases due to lack of time and resources. Unfortunately, this means that much online crime goes unpunished.

Retailers' methods of dealing with fraud

  • After address and card verification checks, manual review is the most common anti-fraud measure, used by 78% of merchants, while 71% are now using Payer Authentication, such as the Verified by Visa scheme.
  • Many UK retailers missed the June deadline for achieving PCI DSS compliance, and 27% of merchants have no plans to meet next year's deadline.

Consumer attitudes towards online fraud

User education is one of the best ways of dealing with online fraud, and it seems some consumers are wising up to the threat:

  • 54% said that they still shop online, but are now more careful as a result of media coverage, though 30% said this had not changed their online shopping habits.
  • 56% now use a credit rather than a debit card, while 84% look for signs that a website is secure and trustworthy before making a purchase.
  • Media scare stories have been enough to dissuade 4% of respondents from shopping online altogether, while 10% shop less often as a result.
  • In contrast to the opinions of merchants, more consumers (24%) feel that responsibility for dealing with online fraud rests with retailers, and just 4% believe that this is a police issue.

Related research:
E-commerce Platforms Buyer's Guide 2007

Related stories:
300m online crimes in 2006, says survey
Online sales growing faster than fraud - Cybersource

Graham Charlton

Published 13 February, 2008 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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