Ecommerce fraud expected to rise

New research conducted by the Centre for Economic and Business Research claims that the cost to the UK economy of ecommerce fraud is expected to rise by about £30million by 2015 as the massive surge of mobile payments and social networking

sites are creating new opportunities for crime.

“The rise of new e-commerce channels: Shoppers Delight or Gangsters Paradise?” report conducted on behalf of PayPoint.net, said the impact of e-commerce fraud on the UK economy is likely to rise by 18%, from £165.2 million in 2011 to £195.3 million in 2015 – predominantly due to new payment channels being more vulnerable to fraudulent activity during the years of early adoption, as it takes time to discover and resolve underlying security issues.

Since reaching a peak in 2008, ecommerce has since declined – falling by 16% in 2009 and a further 4% in 2010 – as business’ adopted more secure payment mechanisms and fraud screening detection tools.

However, the introduction of new online shopping channels will reverse this trend, according to the report, and shopping through social media sites, mobile browsers and apps is expected to be the biggest contributor to the losses, costing £24 million by 2015.

Michael Norton, Managing Director of PayPoint.net, commented: “Shopping on a mobile phone or favourite social media site is the next big thing in e-commerce, but criminals are likely to capitalise on poor awareness of the risks by consumers and retailers alike. This study shows these new ways of shopping could be victims of their own successes for all the wrong reasons. The next few years will be a period of trial and error as mobile and social media commerce evolves in the UK.”

He added: “These large increases in fraud could have a big impact on retailers, as they find themselves having to watch for (and subsequently account for) new kinds of fraud they haven’t seen before. It will be more important than ever for online retailers to have a robust, traditional e-commerce fraud prevention system in place so that best practice strategies can be rolled out to the new shopping platforms.”