Online scammers robbed Americans of more than $437 million in 2003, mostly using stolen identities, fake Internet auctions and fraudulent shop-at-home schemes, the Federal Trade Commission (FTC) reported Thursday.
The center reports receiving over 120,000 online fraud complaints through its website this year – an increase of 60% over the 75,000 complaints counted in 2002.
During the 2002 holiday-shopping season, Internet merchants lost nearly $500 mil due to fraudulent orders. Compared with their brick-and-mortar counterparts, online merchants are facing a risk of fraud that is 19 times higher, according to Gartner.
CyberSource commissioned Mindwave Research to survey 333 merchants in North America in October, reporting that retailers? losses from online fraud have declined over the years as a percent of overall online retail from 3.6% in 2000 to 1.7% this year. For 2002 the fraud level was at 2.9%, for 2001 at 3.2%.
Best practices for avoiding online fraud include Address Verification Service, manual review of orders, internal business rules, CV number, commercial scoring service and Verified by Visa program.
Fraud on UK-issued credit and debit cards totals GBP 411.6 million as of June 2003. Still, many UK consumers are not taking the proper precautions to prevent identity theft. For example, 37% say they never shred or burn bank or credit card statements when they are done with them and 35% say the same about receipts.
Internet use is still growing fast but so is Internet-based fraud, according to security vendor Verisign Inc, which examined data from its own infrastructure services between August 2002 and August 2003.
According to Verisign’s study “Internet Security Intelligence Briefing,” released Monday, 6.2 percent of e-commerce transactions carried out in the U.S. were attempts at fraud. More than half the fraud attempts were made by entities outside the U.S., Verisign said.
Also, the number of security incidents almost doubled between May 2003 and August 2003, Verisign said.
Standard security attacks and fraud are closely linked, according to Verisign.
Visa said 30% of card frauds currently involve Card-Not-Present situations – where the buyer is not present to physically sign off the transaction. It predicted the proportion would rise to nearly half by the end of 2007.