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CURRENTS
Fighting
Payment
Fraud
O
NLINE RETAILERS of all sizes fi ght web pay-
ment fraud by manual review. Th is is true even
in the highly automated online environment,
according to the CyberSource Corp, 10th annual survey of
ecommerce fraud. Th e study revealed that all web merchants
who conduct reviews manually did so on 32 percent of all
orders they received in 2008. Th at nearly parallels the 33
percent that reported this practice in 2007.
Given the time required
Smaller merchants review a higher percentage of online
to recruit and train
orders. Th e study suggested this may be because their lower
order volume permits it. Online retailers with annual revenue workers in manual review
of $500,000 or more, but less than $5 million, reviewed 35
percent of their orders manually in 2008, compared with
techniques, staff retention
51 percent of all orders by merchants with annual revenue
is one key to optimizing
of less than $500,000. By contrast, merchants with revenue
of $5 million or more, but less than $125 million, reviewed
the process.
just 34 percent of orders manually in 2008. Th ose with
annual revenue of $25 million or more reviewed 15 percent
of orders manually.
In 2008, two thirds of merchants overall used four or
“Even larger merchants review a signifi cant percentage of
more fraud detection tools during manual review, with 4.9
online orders. Th ey likely devote more resources to this task
being the average. Larger merchants reported using 6.1 fraud
than is operationally warranted,” noted the report’s authors.
detection tools on average during manual review.
Merchants performing manual review use a wider variety of
Th e report noted that, given the time required to recruit
tools and processes than typically are used in fully automated
and train workers in manual review techniques, staff retention
screening. Att empting to validate an order by contacting
is one key to optimizing the process. Of all the merchants,
the customer directly is standard practice at 70 percent of
15 percent said their review staff was new. Th at fi gure was
all merchants in the survey and at 82 percent of the large
higher (24 percent) among large online retailers. “Fraud rates
merchants. Th e latt er are defi ned as those with annual rev-
or order rejection rates can increase if highly experienced
enue of $25 million or more. Another frequent practice in
review staff members leave an organization and are either
manual review is to contact the card issuer, which is done
not replaced, or replaced by less experienced reviewers,” the
by almost half of all merchants surveyed and by 60 percent
report concluded. WW
of large merchants.
Find this story in our complete article archive at: www.wholesalecentral.com/Wholesale–News
16 May 2009
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