Feeds

E-commerce is a hotbed of fraud

Twelve e-tailing rip-offs for every high street one

  • alert
  • submit to reddit

The Power of One eBook: Top reasons to choose HP BladeSystem

Internet fraud is sky high, according to Gartner, and Web companies are picking up the tab. A survey of 160 companies confirmed many people's fears by saying that fraud over the Internet is 12 times higher than traditional retailer sales.

Another indication that this is the case comes from the terms that credit card companies give e-tailers. Traditional retailers pay credit card discount rates of 1.5 per cent plus 30 cents a transaction (yes, this is an American survey). Online retailers on the other hand pay a higher rate of 2.5 per cent plus the 30 cents. According to Gartner, they also have to pick up the cost of Net gateways and fraud detection - another 50 cents a transaction.

It's gets worse, too. Online sellers also spend more money checking and processing orders. It's no surprise then that credit companies are keeping their distance - something that Avivah Litan of Gartner Financial Services thinks a little unfair. There are alternatives though, he said. "Several savvy startup competitors are giving e-tailers alternatives to credit cards, such as processing that accesses bank accounts directly or via closed loop systems. At the current rates, those firms could give the card companies a run for their money."

Further evidence also comes from the Home Office, which released figures saying online fraud had grown 20 per cent in the last year. According to the CBI, 60 per cent of UK businesses are targeted each year, although many are unwilling to admit attack to avoid damaging their reputations.

The Reg is still waiting for an in-depth study of margins and profits in the online world. For example, are tighter margins overcome by a greater number of orders and lower operating costs? How many of these companies are running a loss on each transaction? Are mother companies subsidising their online arms? If so, how many and by how much? It's about time someone attempted to come up with some answers.

Whether this will be Gartner, which apparently "provides unrivaled thought leadership for more than 10,000 organizations" (ugh), or someone like Forrester, which frequently comes up with the goods, has yet to be seen.

Incidentally, we also think there should be official guidelines on surveys. This survey that we've just written about and will no doubt be plastered all over the IT press was based on just 160 companies. Considering there must be hundreds of thousands of on and offline retailers - is this figure just a wee bit small? And what 160 companies? We hate surveys. ®

Related Stories

Brits get e-hallmark

Top three mobile application threats

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.