Vigilance Pays Off as Fraud Rate Holds for Online Retailers

Fraud rates for online merchants in the United States and Canada remained steady at 0.9% in 2010 for the second straight year, according to a report released by CyberSource. Retailers reported losing $2.7 billion to fraud in 2010, down from $3.3 billion the year before, mostly because they rejected new orders, InternetRetailer.com says.

CyberSource, a subsidiary of payment card network Visa, defines the fraud rate as the percentage of accepted orders that later turn out to be fraudulent. The vendor based its findings on 334 survey responses from North American online retailers, from research done in September and October.

“E-commerce sales are picking up but fraud managers are keeping up with increased fraud volume,” says Doug Schwegman, director for worldwide market intelligence at CyberSource, which provides fraud prevention and payment processing services to online retailers.

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