Fraudulent use of stolen credit cards, the biggest area of online loss, is down by 8% since last year, a leading industry survey has revealed.
Published by Retail Knowledge and sponsored by payment experts Kount, the UK Retail Fraud Survey 2014, now in its fourth year, is the most extensive report into the systems, processes and strategies of 100 of the UK’s top retailers.
The results of the survey have shown online fraud prevention spend has increased from 0.3% of sales in 2012 and 0.4% in 2013, to 0.43% this year. As a result there has been a major decrease in shrink in online credit card fraud from 51% in 2013 to 43% in 2014. This is a decrease of 8% from last year’s figure.
This link between increased spend and reduced online credit card fraud shows just how the industry is recognising the importance of online fraud prevention.
Don Bush from Kount, the UK Retail Fraud Survey sponsor stresses the growing importance of online fraud prevention: “Ecommerce grew a healthy 18% in 2013, cybercrime grew at about 23% in the same period which greatly emphasises the need for a robust online loss prevention strategy.”
He added: “Detecting, preventing and managing fraud is a full time vocation and getting the people, processes and technology right to beat fraud is crucial.”
Despite this decrease however, it’s not all-great news; many of the other areas of online loss have seen an increase in shrink since last year:
· Third party fraud payments rank next at 15% of shrinkage, an increase of 4% since last year.
· Accounting for 13% of loss is card testing which has seen an increase of 3%.
· Friendly fraud has seen no change since last year and remains at 9%.
· The online channel proves much more difficult for employees to steal through. Internal fraud online is much lower than employee theft from stores, as physical access to products is limited to warehouse staff only
Other findings show that most retailers still treat store and online loss prevention separately. However, employees, customers and fraudsters do not make this distinction. Retailers expect online sales to increase from 12% currently to 31% of total business over the next three years. As this happens, an adoption of an increasingly joined up philosophy to all loss prevention, store and online, will be crucial.
For more details on the UK Retail Fraud Survey 2014’s key findings see the attached Executive Summary.
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