Current economic conditions expected to fuel fraud growth

(27/11/2008)

41st Parameter Inc. has announced survey results from a recent event sponsored by the Merchant Risk Council (MRC). Findings indicate fraud and risk management experts from leading e-commerce companies believe current economic conditions will yield increased online fraud activity this holiday season. When asked about their top fraud fighting challenges, 67 per cent identified fraud rings and botnets as key concerns.

Results highlight how online fraud continues to be an issue across most e-commerce organisations. Universal sentiment clearly indicates fraudulent activity tends to follow particular patterns and preys off current events. Survey findings include:

When asked: "How do you expect current economic conditions to impact attempted online fraud at your company this holiday season?" 84 per cent of respondents indicated they anticipate a slight or substantial increase in fraudulent activity.

When asked: "What do you see as the biggest challenge when fighting online fraud?" 67 per cent (two-thirds) of the respondents stated increased fraud ring activity and botnets are of chief concern.

An alarming 30 per cent cited lack of funding to secure better fraud fighting technology as their primary challenge.

"As the Global economy continues to slow down, organisations are slashing budgets across the board, including vital IT needs designed to help protect the bottom-line," said Ori Eisen, chief innovation officer, 41st Parameter. "What's particularly alarming about this counter-intuitive strategy is roughly one-third of e-commerce fraud investigators surveyed said their number one challenge is not receiving adequate funding to procure proper fraud prevention technology, thereby leaving their online channel a key target for cybercrime."

41st Parameter conducted the survey during a joint webinar with the Merchant Risk Council, which included two FraudNet customer panelists. There were over seventy-five loss prevention specialists in attendance, comprised mostly of MRC members, representing over forty of the top online merchants. Results from other survey questions were inconclusive, including 50 per cent responding they expected an increase in online sales this holiday season, as opposed to the other half of respondents stating they anticipate flat or decreased comp sales.

As for CyberMonday, a mere 11 per cent expected a significant percentage of holiday sales activity to come from one day, whereas the majority anticipate a steady distribution, including fraud attempts, throughout the holiday season.

Related topics:  Authentication and identity management   Crime and Fraud Prevention   Hacking and intrusion prevention   Security threats and vulnerabilities   Virus, Worm, Email security, spyware and malware 

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