Online fraud concerns on rise as holiday season nears
Internet retail sales are growing, and so are fraudulent transactions
Computerworld - The upcoming holiday shopping season promises to be a busy one not just for Internet retailers, but for opportunistic online fraudsters and identity thieves as well.
As a result, Internet merchants -- especially smaller ones -- will need to make sure they have adequate fraud- and theft-detection processes in place before the rush begins, industry experts warned.
"I think the problem is going to be real bad," said Tom Mahoney, founder of Merchant911.Org, a 1,600-member forum in which merchants can share fraud-prevention information.
"All the projections we're seeing are for a significant increase in online sales. Because of this rush, there will be less time for smaller merchants that do some or all of their own fraud screening, to do it well," Mahoney said. Expect to see an increase in the number of successful fraudulent transactions and lost dollars as a result, he said.
VeriSign Inc., which provides payment processing services for more than 97,000 North American businesses and processed nearly $7 billion in online retail sales in the third quarter, is already seeing a substantial increase in transaction volumes going into the shopping season. The number of transactions on its networks jumped from 61 million in the third quarter of 2002 to more than 91 million in the same quarter this year. And it's continuing to rise as December approaches.
Along with that growth has come a sharp spike in fraudulent transactions, said Trevor Healy, vice president of VeriSign payment services. "While e-commerce appears to be alive and kicking, the growth rate in the levels of fraud appear to be growing at the same rate as well," he said. "What we are seeing is about 3% to 4% of a retailer's bottom line being consumed by fraud."
Much of this results from goods being purchased using stolen or fake credit and debit cards, or from consumers claiming they never received goods that were shipped to them. Reshipping schemes involving the purchase and subsequent shipping of goods outside the country using fake credentials and credit cards are another common problem.
Improperly secured e-commerce sites have also been responsible for feeding the alarming growth in identity theft, said Dan Clements, who runs a Malibu, Calif.-based organization called CardCops.Com, which shares information on stolen credit cards with merchants and consumers. "The threat we see is that of merchants being continually hacked and losing credit card and personal information," Clements said. "In turn, those cards are used on other merchants who bear the responsibility for the order and chargeback."
But the growing availability



- Excel 2010 Cheat Sheet
- Register for this Computerworld Insider Cheat Sheet and gain access to hundreds of premium content articles, guides, product reviews and more.
- Smarter Commerce is redefining value chain visibility
- Smarter Commerce is redefining the value chain in the age of the customer. It starts with putting the customer at the center of...
- IBM Synchronizes its Commerce 2.0 Strategy with 'Smarter Commerce' Initiative
- On March 14, IBM announced "Smarter Commerce", a strategic initiative that addresses the surging market for Commerce 2.0 solutions that take advantage of...
- Proof Positive - Extended Validation SSL Increases Online Sales and Transactions
- With the threat of identity theft and other types of fraud rampant on the internet, many consumers are reluctant to release their details,...
- Overcome Top 7 Admin Challenges of Active Directory
- As Active Directory's role in the enterprise has drastically increased, so has the need to secure the data. Gain insight on creating repeatable,...
- Insiders Can Ruin Your Company. Take Action.
- Did you know that 80 percent of threats to an organization come from the inside? The threat from insiders is often overlooked in... All E-business White Papers
- Optimizing Networks for the Cloud
- Join guest speaker, Rohit Mehra, IDC Director of Enterprise Communications Infrastructure, to explore current trends, discuss best practices for optimizing Data Center and...
- Apps QuickStart Series Part 2: Designing and Deploying SQL Server on VMware vSphere
- Download this webcast to learn about the design considerations for virtualizing SQL workloads, performance and scalability information and high-availability options, as well as...
- Apps QuickStart Series Part 1: Designing and Deploying Exchange 2010 on VMware vSphere
- Download this webcast to learn the virtual hardware design considerations for Exchange 2010, deployment using the building block approach, options for high-availability and...
- Customer Spotlight: How IPC The Hospitalist Company Implemented Oracle on VMware
- Have you been looking to hear about customer's experiences with the new VMware vCenter Site Recovery Manager product? View this webcast to learn...
- Virtualize Business-Critical Applications with Confidence
- Virtualizing business-critical applications has become a key focus for organizations as they move along their virtualization journey. With the launch of VMware vSphere®... All E-business Webcasts