by Alex Smith
Internet fraud takes a variety of forms — phishing emails, pharming, money transfer, work-at-home schemes — the list is ever-changing and lengthens all the time. No matter how it is done, the end result is that fraudsters get information about consumers that they should not have access to — usually their debit or credit card details.
Online fraud has been a huge concern for consumers since the first dot com stores set up shop and it is a worry for e-commerce sites too. In 2011 a survey by CyberSource showed that 59% of online merchants felt online fraud to be their biggest business threat, ranking it above systems failure, viruses and theft of customer data.
Statistics just out from the UK Cards Association show that the amount of online fraud is actually decreasing, with a 15% drop in card-not-present crime and a 22% fall in online banking fraud. On the face of it, it seems that this is great news for consumers, suggesting safer purchasing and money management on the internet, and thusly great news for e-commerce retailers too.
However this isn’t quite the case, as the research also revealed that there’s more attempted phishing fraud going on than ever before — it’s just that consumers are learning to be more careful so less attempts are successful.
As well as weeding out the fraudsters, it is likely that this caution will cause falling conversion rates on perfectly legitimate websites that do not display enough security information and fail to inspire confidence in the consumer. Retail sites can invest in an extended SSL certificate that highlights the green https bar at checkout and use reputable names for these security certificates but it is going to take more than that to restore the trust of wary consumers.
The e-commerce world needs to send a strong message of reassurance to consumers in order to offset the ongoing impact of customer caution. The introduction of 3D Secure has been the biggest development in this area of recent years but it is far from perfect. The launch of 3D Secure was poorly publicised and in many cases poorly implemented by websites, with many consumers being presented with mid-way through the checkout with a non co-branded page that they had not seen before.
There have been improvements in this area with more websites explaining about 3D Secure and consumers naturally becoming more used to entering an extra password. However there will always be some potential purchasers who are lost thanks to this extra step in the checkout process. There must be a better solution that can accommodate security necessities with the design needs of e-commerce sites.
The future shall surely see more investment in consumer-friendly security technology and website checks to ensure that credit card details are kept unfailingly safe.
What is your predictions for the next big development in internet security and anti-fraud? Perhaps a whole new internet currency like Bitcoin or special online coupons is the answer or maybe the development of real-time advanced intelligence checks to corroborate the identity of the purchaser. Comments welcomed!