A Scenic Tour of the Online World

E-commerce Fraud Continues to Fall

Friday, January 29th, 2010

Online crime fell sharply in 2009, according to a survey of U.S. and Canadian online merchants conducted by CyberSource, the security firm.

What’s even more interesting than the overall drop of 18% is that the drop came as online sales have grown. So fraud as a percentage of online sales revenue also continues to fall. It’s now at 1.2%.

Not surprisingly, international orders have a much higher fraud rate than domestic orders – about double. Still, even these numbers fell, another good sign for online commerce.

I’m sure the arms race between merchants and criminals will continue, as it does in every area of business, online and off, but for the moment at least, it seems that the good guys have the upper hand. Presumably as the online market grows and still more security resources are aimed at e-commerce, fraud losses fall further.

So how does this compare to “inventory shrinkage” as physical retailers refer to shoplifting and employee theft? Pretty well, though not dramatically different. One study I found from roughly the same period as the CyberSource survey pegs shrinkage at about 1.43% of sales.

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