Fraud is a pricey business for e-merchants

A SecureBuy and Magento study reveals that 57% of international merchants do not conduct any form of pre-fraud screening leading up to authorization – and this is costing them money.

Some other more positive findings indicate that, as the author says: "Merchants are becoming aware of the technologies currently available to help reduce, and in some cases, completely remove the need for manual review."

A further breakdown of the 10 page study in which 378 Magento merchants were questioned brings other fraud based information to light:

*20% of merchants said that their fraud solutions were automated compared to 30% of international merchants and according to the report: “there is a serious need to automate the fraud screening process.”

*On the other hand, the study indicates that merchants are moving towards the incorporation of more reliable anti-fraud solutions.

*57% of the respondents do not do pre-fraud screening and 40% who are performing pre-fraud screening are doing so with manual reviews, which according to the report is a process that is inclined towards inaccuracy.

*CNP (card-not-present) merchants pay $3.10 for every dollar of fraud that is lost.

*Because of the loss merchants are turning away from fraud screening and towards payer authentication services, which are more common among international merchants - 64% having used such services.

*Most chargebacks come from credit card users

*Merchants respond to ONLY 54% of chargebacks which results in enormous losses.

Image courtesy of Flickr