Online merchants lose 1.4% of their revenue to fraud. That’s about $4 billion in annual sales. So what are they doing about it?
Many plan to increase the usage of online fraud detection tools in 2009, according to a survey by electronic payment, risk and security management provider CyberSource.
The company’s 2009 Online Fraud Report polled 400 online merchants in the U.S. and Canada. The study shows respondents’ implementation plans for three online fraud detection tools— device fingerprinting, IP geolocation and order velocity monitoring—have more than doubled, based on the 2008 survey results.
Forty-seven percent of merchants with more than $25 million in online revenue and 25% of all surveyed merchants indicated they were planning to add device fingerprinting. This tool examines and records details about the configuration of the device from which the order is being placed.
Device fingerprinting was rated by 43% of online merchants currently using the devices as being one of their three most effective tools, according to the study.
IP geolocation, a tool that attempts to identify the geographic location of the device from which an online order was placed, will be added by 18% of respondents. It provides an additional piece of information to compare against other order information and order acceptance rules to help assess the fraud risk of an order.
And 15% of all merchants—including 17% of merchants with more than $25 million in online revenue, plan to include order velocity monitoring systems, which help detect suspicious patterns of purchasing.