Online retailers 'easy target for fraudsters'

More than 97% of online retailers were hit by credit or debit card fraud during the past year, according to new research.

Fraud in which a lost or stolen card is used to buy things remotely through the internet, or by telephone, cost businesses about £95.7m (€149m) during 2001, says Experian.

But despite this, 28% of retailers are still only using manual fraud checks, such as checking a card has not been reported stolen.

Retailers are failing to use external information to verify a customer's name and address before authorising an online transaction.

Nine out of 10 of the retailers questioned who sold products over the Internet said their revenue from online transactions had risen during the past year, but they were still only spending between 1% and 5% of their IT budgets on improving online security.

Experian also found that in nearly half of cases it takes retailers up to four weeks to be informed of a fraud, and in 48% of these cases more than one transaction was carried out on the site before the fraud was detected.

About 80% of retailers said they thought using a system to verify a customers name and address would be an effective way to help prevent stolen cards being used, while 83% said they thought online sales would rise if consumers were not concerned about fraud.

Gareth Jones, fraud products director at Experian, said: "Our survey clearly illustrates how important online trading is to the retail industry, yet according to our research over 97% of online retailers are being affected by online fraud and bearing the brunt of a very expensive problem.

"Despite this, nearly 28% of online retailers are still employing only manual fraud checks and many online retailers are still not using any external information to verify a customer's name and address before authorising an online transaction."