Online sales in the U.S. are showing robust growth in an otherwise gloomy retail environment. But while the economics of selling over the Internet are compelling, losses due to e-commerce fraud continue to rise.
In 2007, e-commerce fraud cost U.S. retailers more than $3 billion in revenue losses. They spent billions of dollars more to combat the problem. Those losses have been growing each year by double-digit percentages, despite merchants’ use of more anti-fraud tools and increased fraud staffing, putting pressure on retailers to find new and better ways of combating fraud. Sophisticated criminal networks, many operating internationally, use stolen cards and compromised card information to make fraudulent purchases anonymously on the web. E-commerce merchants of all types and sizes are vulnerable, especially those selling high-value merchandise such as electronics and jewelry and airline and concert/event tickets.