Internet Fraud Report

An Internet fraud report: a brief overview of the current situation

Internet Fraud

Though small in relation to ecommerce turnover, Internet fraud is serious — for the victims and for the reputation of the industry. According to NCL, US Internet fraud losses amounted to $6 million in 2001. Their breakdown: {1}

Online Auctions	70%
General Merchandise	9%
Nigerian Money Offers	9%
Computer Equipment	2%
Internet Access Services	2%
Adult Services	2%
Work at Home Plans	2%
Advanced Free Loans	1%
Credit Card Offers	0.5%
Business Opportunities	0.5%

Overtopping everything was e-auction fraud. Of the 31% of online Americans (35 million people) who participated in online auctions in 2000, 41% encountered problems. Checks were cashed without goods being sent (or vice versa) and the average loss per victim was $326. The obvious safeguards were not known or not used. Only 17% paid with credit cards and a mere 6% employed an escrow service. {2}

A Gartner survey produced much higher figures. $700 million in online sales were lost to fraud in 2001, representing 1.14% of a $61.8 billion total. This was some 19 times that of offline fraud, and 5.2% of 1000 online customers surveyed complained of credit card fraud, and 1.9% of identity theft. Once again, many customers had only themselves to blame — they were prepared to adopt simple password-based applications and not employ the more demanding PKI, smart-cards and disposable card-number systems. {3}

Responses to a survey conducted at The Worldwide E-Commerce Fraud Prevention Network's site reported 50% with fraud losses in the $1-100,000 range, and a staggering 19% who had lost more than $100,000. {4}

Retailers stand to lose more than customers. An Experian survey back in 2000 indicated that, though UK online credit card fraud was under 1% on most websites, it had reached 40% on some sites for software, ticket sales and the household electrical goods. Moreover, while customers were liable only for the first £50 of fraud, retailers had to cover the full cost of such theft, with prosecution of offenders still difficult. {5}

Fraud Prevention

E-tailers are gradually adopting protective measures, though more reasonable charging by credit card processing companies would help. Some 70% of e-merchants adopt address verification systems, 54% follow up with their customers or adopt real-time authorizations, and 43% adopt after-the-fact fraud prevention measures. {4}.

A good range of solutions is now available, and free papers can be downloaded from the security companies concerned. {6} {7} {8} {9}

Please note that this page is out of date, and that simple measures exist to prevent or minimize Internet fraud. For more details consider our ADVANCED GUIDE TO ECOMMERCE, now in its nineteenth edition, which contains a proper Internet Fraud Report, with extensive listings on anti-fraud measures, and what to do if you fall a victim of fraud or misrepresentation.

An overview . . .

• The Internet's most detailed guide to ecommerce: 233,000 words / 782 pages in pdf format.
• 160 reference sheets summarizing a particular aspect, with advice and resources as appropriate.
• Over 4,000 resource listings grouped under 260 headings: each hand-picked on its merits.
• Fourteen comparison tables in key product areas.
• A proven approach to planning ecommerce.
• Practical advice on improving sales and conversion ratios.
• An extended guide to pay-per-click and sponsored listings.
• Use of business blogs, advised and ill-advised.
• Practical security aspects: keeping yourself safe.
• Testing sites and ideas at negligible cost.
• Links to 2,000 case studies, both successes and failures.
• Notes on ecommerce strategies and use of the resource listings.
• Tutorials on AdSense, ePublishing, eBay, RSS feeds, commercial blogging, ecommerce for free, widgets, collective intelligence, seo revisited, cooperative websites and using ppc effectively.
• Ten up-to-date surveys of ecommerce prospects worldwide.
• Insider information based on Internet research and our own studies.
• Strategies to test customer behaviour and improve sales.
• Comes as a WebExe sequential webpage compilation (2 Mb) and as a pdf document (5 MB). The one purchase gives you both documents, plus free updates every six months.

Click here for a full contents listing of the current edition.

Our $37.50 e-book comes with a 30-day, no-questions-asked guarantee. If not fully satisfied, then simply email us for a prompt and full refund. Material is continually being checked and extended, and purchase includes free six-monthly updates.

The e-book is provided as two documents: a WebExe sequential webpage compilation (2 MB, neater layout, 782 pages) and as a PDF document (5MB, 782 pages). The content is the same in both documents, but while the PDF document can be read on all platforms, the WebExe compilation can only be read on Windows platforms. Your one-time payment gives you both documents, plus free updates.

Our February 2012 free update will include a tutorial on mobile platforms.

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