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One Percent Of Online Sales Lost To Fraud

By InternetWeek.com, InternetWeek
Mar 4, 2002 (10:51 AM)
URL: http://www.internetwk.com/story/INW20020304S0005

More than 1 percent of total online sales, or $700 million, was lost due to 
fraudulent activity in 2001, according to Gartner Inc.'s G2 research service. 
The $700 million, which represents 1.14 percent of total online sales of $62 
billion, is nearly 20 times higher than the dollar value of fraud losses 
related to offline sales, Gartner G2 said. In an Internet survey of 1,000 adult 
online consumers in the U.S., Gartner found 5.2 percent were the victims of 
credit card fraud in 2001, while 1.9 percent were victims of identity theft.
More than 18 percent of the individuals surveyed said they're attempting to 
fight fraud by embracing two credit card protection systems: Visa's Verified by 
Visa and MasterCard's Universal Cardholder Authentication Field and Secure 
Payment Application.

In fact, those schemes are preferable to public key infrastructure, smart 
cards, and disposable card numbers, according to survey respondents.

One disincentive for merchants to push online sales: Merchants pay higher fees 
for Internet transactions vs. in-store sales, and they'll continue to do so in 
the future.



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