E-Merchants Recognize Online Fraud as a Serious Problem, But Majority Believes Fraud Prevention Tools Can Keep it in Check

Worldwide E-Commerce Fraud Prevention Network Canvasses its Members

For Trends About How Online Merchants Are Combating Fraud



Apr 05, 2001, 01:00 ET from Worldwide E-Commerce Fraud Prevention Network

    NEW YORK, April 5 /PRNewswire/ -- The Worldwide E-Commerce Fraud
 Prevention Network reported today that nearly half of its members who
 responded to an internal survey feel that online fraud is a significant
 problem, but 70 percent agreed that fraud prevention tools can keep it to a
 minimum.
     Members accessing the Network's Web site, www.merchantfraudsquad.com, were
 asked about how online fraud affects their businesses in a voluntary online
 poll. Of nearly 1,000 members, 140 responded during the week of March 5.
 Notably, nearly 10 percent of the respondents identified online fraud as "the
 most significant problem" they face. Only one percent said, "they never worry
 about it at all."  Thirty-six percent viewed online fraud as "somewhat
 significant."
 
     How Merchants Fight Fraud
     The survey listed 11 fraud prevention tools and asked merchants whether
 they utilized them and which they rated as most effective at reducing online
 fraud.  The four most popular tools were: address verification systems (70
 percent); customer follow up and real-time authorizations (both 54 percent)
 and post-process fraud management (43 percent). Interestingly, although 54
 percent of respondents listed customer follow-up as a tool they use to combat
 fraud, only 38 percent viewed it as most effective.
     Asked to rate the tools as most effective for reducing online fraud,
 survey respondents listed the following: address verification systems (68
 percent); real-time authorizations (52 percent); card verification codes (49
 percent) and customizing rules (42 percent). Rated as most effective among at
 least one-third of respondents were fraud scoring, negative file lists,
 customer follow-up and post process fraud management
     The least utilized tool was a custom-built neural network, with only 12
 percent of merchants indicating they use this fraud prevention method.
     "It is clear that online merchants view fraud as a serious problem, but
 the good news is that many merchants seem to be taking steps to prevent it,"
 said Ayesha Almeida, Vice President for Online Usage and Marketing, American
 Express and Network co-chair.
     Merchants taking the survey represent large, medium and small online
 sites. Forty-five percent listed annual revenues of more than $1 million, 35
 percent listed revenues at less than $100,000, and 20 percent reported
 revenues of between $100,000 and $1 million.
 
     Other results of the snapshot survey include:
     * Fifty percent of respondents reported that losses from online fraud cost
       their businesses between $1,000 and $10,000. Nineteen percent reported
       costs at more than $100,000.
     * Sixty percent of merchants reported they spend less than one percent of
       total revenues on fraud prevention. Nineteen percent listed about one
       percent of revenues, and 10 percent reported they spend more than three
       percent of revenues on fraud prevention.
     * Thirty-three percent of respondents listed the difficulty in prosecuting
       Web-based fraud as the greatest threat to their online business. Other
       threats included: stolen credit cards (22 percent); lack of security
       standards across the Web (19 percent); growing use of credit card
       generators (14 percent); and identity theft (12 percent).
 
     Commenting about online fraud prevention tools, Steven Citarella of First
 Data Corp., a Network founding member, noted that while address verification
 systems (AVS) are widely used online, they have their limitations. "Online
 merchants should understand that a layering of fraud prevention technology and
 techniques is the most effective course."
 
     Network Web site Features Research about Fraud Solutions and New Articles
     This month, the Network's Web site, http://www.merchantfraudsquad.com ,
 offers a Gartner white paper on online fraud prevention, which indicates that
 transaction-screening software can help merchants reduce fraud by up to 60
 percent. This comprehensive report from a leader in research and analysis
 includes a review of some of the fraud prevention software available on the
 market today. The report is available at no cost to Network members.
     In addition, the Network Web site features articles on the following: AVS
 and international addresses; how merchants can protect themselves against
 fraudulent credit card numbers created by a Web generation program; and
 firewalls and SSL.  This information is intended to help members further
 refine their fraud prevention solutions.
 
     Network Membership Tops 1,000
     More than 1,000 e-commerce businesses and organizations have joined the
 Worldwide E-Commerce Fraud Prevention Network, a not-for-profit organization
 formed last fall by American Express and other e-commerce leaders including
 ClearCommerce, Expedia.com, and First Data Corp.
 
     The Network seeks to significantly reduce merchants' exposure to online
 fraud and promote the growth of e-commerce.  The Network's merchant focus
 distinguishes this group from others that are trying to combat this problem.
 Free charter membership is available to any organization or business committed
 to the Network's mission.
     To learn more about the Network and sign up to join, visit
 http://www.merchantfraudsquad.com .
 
 

SOURCE Worldwide E-Commerce Fraud Prevention Network
    NEW YORK, April 5 /PRNewswire/ -- The Worldwide E-Commerce Fraud
 Prevention Network reported today that nearly half of its members who
 responded to an internal survey feel that online fraud is a significant
 problem, but 70 percent agreed that fraud prevention tools can keep it to a
 minimum.
     Members accessing the Network's Web site, www.merchantfraudsquad.com, were
 asked about how online fraud affects their businesses in a voluntary online
 poll. Of nearly 1,000 members, 140 responded during the week of March 5.
 Notably, nearly 10 percent of the respondents identified online fraud as "the
 most significant problem" they face. Only one percent said, "they never worry
 about it at all."  Thirty-six percent viewed online fraud as "somewhat
 significant."
 
     How Merchants Fight Fraud
     The survey listed 11 fraud prevention tools and asked merchants whether
 they utilized them and which they rated as most effective at reducing online
 fraud.  The four most popular tools were: address verification systems (70
 percent); customer follow up and real-time authorizations (both 54 percent)
 and post-process fraud management (43 percent). Interestingly, although 54
 percent of respondents listed customer follow-up as a tool they use to combat
 fraud, only 38 percent viewed it as most effective.
     Asked to rate the tools as most effective for reducing online fraud,
 survey respondents listed the following: address verification systems (68
 percent); real-time authorizations (52 percent); card verification codes (49
 percent) and customizing rules (42 percent). Rated as most effective among at
 least one-third of respondents were fraud scoring, negative file lists,
 customer follow-up and post process fraud management
     The least utilized tool was a custom-built neural network, with only 12
 percent of merchants indicating they use this fraud prevention method.
     "It is clear that online merchants view fraud as a serious problem, but
 the good news is that many merchants seem to be taking steps to prevent it,"
 said Ayesha Almeida, Vice President for Online Usage and Marketing, American
 Express and Network co-chair.
     Merchants taking the survey represent large, medium and small online
 sites. Forty-five percent listed annual revenues of more than $1 million, 35
 percent listed revenues at less than $100,000, and 20 percent reported
 revenues of between $100,000 and $1 million.
 
     Other results of the snapshot survey include:
     * Fifty percent of respondents reported that losses from online fraud cost
       their businesses between $1,000 and $10,000. Nineteen percent reported
       costs at more than $100,000.
     * Sixty percent of merchants reported they spend less than one percent of
       total revenues on fraud prevention. Nineteen percent listed about one
       percent of revenues, and 10 percent reported they spend more than three
       percent of revenues on fraud prevention.
     * Thirty-three percent of respondents listed the difficulty in prosecuting
       Web-based fraud as the greatest threat to their online business. Other
       threats included: stolen credit cards (22 percent); lack of security
       standards across the Web (19 percent); growing use of credit card
       generators (14 percent); and identity theft (12 percent).
 
     Commenting about online fraud prevention tools, Steven Citarella of First
 Data Corp., a Network founding member, noted that while address verification
 systems (AVS) are widely used online, they have their limitations. "Online
 merchants should understand that a layering of fraud prevention technology and
 techniques is the most effective course."
 
     Network Web site Features Research about Fraud Solutions and New Articles
     This month, the Network's Web site, http://www.merchantfraudsquad.com ,
 offers a Gartner white paper on online fraud prevention, which indicates that
 transaction-screening software can help merchants reduce fraud by up to 60
 percent. This comprehensive report from a leader in research and analysis
 includes a review of some of the fraud prevention software available on the
 market today. The report is available at no cost to Network members.
     In addition, the Network Web site features articles on the following: AVS
 and international addresses; how merchants can protect themselves against
 fraudulent credit card numbers created by a Web generation program; and
 firewalls and SSL.  This information is intended to help members further
 refine their fraud prevention solutions.
 
     Network Membership Tops 1,000
     More than 1,000 e-commerce businesses and organizations have joined the
 Worldwide E-Commerce Fraud Prevention Network, a not-for-profit organization
 formed last fall by American Express and other e-commerce leaders including
 ClearCommerce, Expedia.com, and First Data Corp.
 
     The Network seeks to significantly reduce merchants' exposure to online
 fraud and promote the growth of e-commerce.  The Network's merchant focus
 distinguishes this group from others that are trying to combat this problem.
 Free charter membership is available to any organization or business committed
 to the Network's mission.
     To learn more about the Network and sign up to join, visit
 http://www.merchantfraudsquad.com .
 
 SOURCE  Worldwide E-Commerce Fraud Prevention Network