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Online fraud costs UK businesses £400k each

Microscope contributor

Online fraud cost UK businesses an average of £400,000 last year with more than half of UK firms identifying criminal activity as one of the main threats to their livelihoods.

The 2010 edition of the UK Online Fraud Report, commissioned by CyberSource, shows that merchants expect to lose 1.8% of online revenues to payment fraud, but 48% expect to lose less than 1%.

The news comes as the National Fraud Intelligence Bureau prepares to accept information from Fraud Action, the online fraud reporting centre.

Credit and debit card payments were three times more popular than other forms of payment. Merchants were also more prepared to use authentication schemes such as Verified by Visa and MasterCard SecureCode.

More than 70% of merchants review online orders, with 5% checking every order manually. CyberSource said this was often wasted time and effort; automation tools could check transactions, with only exceptions referred to people for verification.

Researchers found that 57% of respondents believe online fraud is one of the greatest threats to their businesses.

Large and very large firms feared the loss of customer data most, but this fear has risen since 2007 from 6% to 52% of all firms. The Information Commissioner's Office is now able to levy fines of up to £500,000 for data breaches. This made implementing a payment security strategy to secure sensitive payment and personal details more important than ever before, CyberSource said.

CyberSource found all businesses were optimistic about increasing their online revenue, with small and medium enterprises the most optimistic. The research also showed that online is a greater proportion of their sales than at larger firms.

Overall, 40% of merchants expected to grow online sales by up to 20%, while 21% expected online sales to be static or to drop.

The study showed that half of UK consumers still do not shop online, with 71% put off by safety issues. A quarter believed it was up to the merchants to safeguard their information and transactions.

This article first appeared on www.computerweekly.com

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