Cyberthieves Take Big Bite Out of Online Earnings. New Study Reveals Real Extent of Damage Caused by Cybercriminals — Especially to Mobile Merchants.
Merchants doing business in cyberspace pay a stiff tariff to cybercriminals. And that amount just got stiffer.
When you include lost business and customers, negative branding, etc., every dollar lost to cybercriminals through fraud last year, in reality cost merchants $2.69. And this year number is up a dime to $2.79. Those are the findings of a 2013 True Cost of Fraud study by LexisNexis, a company that provides content-enabled workflow solutions in the legal, risk management, corporate, government, law enforcement, accounting, and academic markets.
According to a piece by Pete Rizzo on pymnts.com, the study showed that mobile commerce merchants paid the most due to fraud and that trend should only continue as more cybercriminals migrate to mobile.
Security expert Ehsan Foroughi says, “In the mobile space, all the focus has been about usability…. Security has been put aside for the longest time. Now that there are billions of users and lots of opportunity for the attackers, it is becoming a battleground that has minimal defense prepared.”
In 2013, mobile merchants average fraud losses equaled 0.75 percent of their revenue from 2012. Maikel Lobbezoo, VP of product development at global payment provider Adyen, thought the reason was there were not a whole lot of successful solutions available. “(T)he lack of much data available and indeed having less security options, like browser fingerprinting and 3D secure, is offering less protection against fraudulent transactions.”
The report observed that generally among e-commerce merchants, mitigating fraud actually boosted sales and improved customer retention. However, not all mobile merchants shared the views of their ecommerce brethren when it came to their niche of the market. Twenty-four percent saw costs associated with fraud as too difficult to control – the view likely coming from the fact that mobile merchants used an average of four antifraud solutions, which have not solved their problem.
“Our merchants are experimenting with several relatively new products for mobile commerce, and like with any emerging technology there will be an adjustment period to find the correct set of tools for different business models,” said Karisse Hendrick, U.S. program manager at Merchant Risk Council, a nonprofit that promotes operational excellence for fraud in eCommerce.
While 24 percent of mobile merchants were not optimistic about their use of fraud solutions controlling fraud, 64 percent indicated that reducing fraud would, indeed, boost their sales and 49 percent acknowledged that lower fraud rates would likely improve customer loyalty.
ThreatMetrix is the fastest-growing provider of integrated web fraud and cybersecurity solutions. The TrustDefender™ Cybercrime Protection Platform helps companies prevent unauthorized access to web and mobile applications, protect sensitive data, and secure transactions against account takeover, payment fraud, identity spoofing, malware, and data breaches. ThreatMetrix protects more than 1,900 customers and 9,000 websites across a variety of industries, including financial services, enterprise, e-commerce, payments, social networks, government, and insurance. For more information, visit www.threatmetrix.com or call 1-408-200-5755.
To join in the cybersecurity conversation, follow us on Twitter @ThreatMetrix.