Feeds

E-commerce is a hotbed of fraud

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

  • alert
  • submit to reddit

High performance access to file storage

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

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.