Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Attacks/Breaches

U.S. E-Commerce Fraud Total Will Hit $4 Billion, Study Says

Online fraud costs merchants about 1.4 percent of their top-line revenue annually, survey says

U.S. companies that do electronic commerce will lose a record $4 billion to online fraud this year, but they are taking steps to fight it, according to a report issued today.

According to the annual Cybersource survey on e-commerce fraud, e-commerce fraud is up slightly over 2007, when it set the previous record of $3.7 billion. The 2008 figure represents about 1.4 percent of merchants' total online revenue for the year -- roughly the same percentage of loss that merchants have experienced in each of the past three years.

"For years, U.S. e-commerce merchants have fought fraudsters to what amounts to an annual standoff," says Doug Schwegman, CyberSource director of market and customer intelligence. "Losing on average about 1.4 percent of sales to fraud has been the constant. This year, however, for the first time, merchants could not rely on double-digit market expansion to bolster online revenue growth or to cover inefficiencies."

To date, many merchants have been fighting fraud by flagging suspicious orders and reviewing them manually, Cybersource says. For each of the past six years, approximately one out of every four online orders has been manually reviewed, and in 2007 approximately 4.2 percent of orders were rejected due to suspicion of fraud.

This year, however, merchants are accepting a higher percentage of orders, rejecting just 2.9 percent, according to the study. "Falling rejection rates, coupled with steady fraud rates, imply that merchants are more successful this year than in previous years at fighting fraud," the study says.

Midsize merchants " those with online revenue of $5 million to $25 million -- are most challenged by online fraud, the study says. When compared with larger merchants, midsize companies show higher order rejection rates (4.3 percent vs. 2.4 percent), higher manual review rates (34 percent of orders, vs. 15 percent), and higher fraud loss rates (1.6 percent of revenue vs. 1.2 percent).

"We believe the largest merchants are simply better at fighting fraud," Schwegman says. "They make better use of fraud detection tools and other resources. And, as they work through the growing pains of becoming a large merchant, midsize merchants' fraud metrics may actually spike if they haven't implemented the tools and established the review expertise to sufficiently protect them from the increase in the volume of fraudulent activity." Fraud chargebacks can represent a profit potential for merchants, the study says. Currently, merchants fight only about half of the fraud chargebacks they receive. One-third of merchants challenge fewer than 10%. But merchants that do elect to challenge chargebacks recover, on average, 28% of their fraud chargebacks. "For many merchants, this remains an untapped opportunity," Cybersource says.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Commentary
Ransomware Is Not the Problem
Adam Shostack, Consultant, Entrepreneur, Technologist, Game Designer,  6/9/2021
Edge-DRsplash-11-edge-ask-the-experts
How Can I Test the Security of My Home-Office Employees' Routers?
John Bock, Senior Research Scientist,  6/7/2021
News
New Ransomware Group Claiming Connection to REvil Gang Surfaces
Jai Vijayan, Contributing Writer,  6/10/2021
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win an Amazon Gift Card! Click Here
Latest Comment: This comment is waiting for review by our moderators.
Current Issue
The State of Cybersecurity Incident Response
In this report learn how enterprises are building their incident response teams and processes, how they research potential compromises, how they respond to new breaches, and what tools and processes they use to remediate problems and improve their cyber defenses for the future.
Flash Poll
How Enterprises are Developing Secure Applications
How Enterprises are Developing Secure Applications
Recent breaches of third-party apps are driving many organizations to think harder about the security of their off-the-shelf software as they continue to move left in secure software development practices.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2021-20027
PUBLISHED: 2021-06-14
A buffer overflow vulnerability in SonicOS allows a remote attacker to cause a Denial of Service (DoS) by sending a specially crafted request. This vulnerability affects SonicOS Gen5, Gen6, Gen7 platforms, and SonicOSv virtual firewalls.
CVE-2021-32684
PUBLISHED: 2021-06-14
magento-scripts contains scripts and configuration used by Create Magento App, a zero-configuration tool-chain which allows one to deploy Magento 2. In versions 1.5.1 and 1.5.2, after changing the function from synchronous to asynchronous there wasn't implemented handler in the start, stop, exec, an...
CVE-2021-34693
PUBLISHED: 2021-06-14
net/can/bcm.c in the Linux kernel through 5.12.10 allows local users to obtain sensitive information from kernel stack memory because parts of a data structure are uninitialized.
CVE-2021-27887
PUBLISHED: 2021-06-14
Cross-site Scripting (XSS) vulnerability in the main dashboard of Ellipse APM versions allows an authenticated user or integrated application to inject malicious data into the application that can then be executed in a victim’s browser. This issue affects: Hitachi ABB Power Grids ...
CVE-2021-27196
PUBLISHED: 2021-06-14
Improper Input Validation vulnerability in Hitachi ABB Power Grids Relion 670 Series, Relion 670/650 Series, Relion 670/650/SAM600-IO, Relion 650, REB500, RTU500 Series, FOX615 (TEGO1), MSM, GMS600, PWC600 allows an attacker with access to the IEC 61850 network with knowledge of how to reproduce the...