While online retailers continue to beef up their fraud detection capabilities, according to Javelin’s “2008 Identity Fraud Forecast” combating Internet credit card fraud is expected to rise until as least 2010. With higher fraud levels on the horizon, eMerchants will continue to face losses that go beyond the loss of online purchases, but impact their business growth.

It’s a well-known fact that fraud impact consumers’ online spending habits. According to Javelin, 3 out of 10 fraud victims decrease their online shopping. But for online retailers, the impact doesn’t stop there. Aside from losing valuable customers, fraud victims likely warn others of their experiences with particular sites, which can result in untold profits lost due to a lack of customer confidence, not to mention a devastating ripple effect due to a tarnished reputation.

One of the fraud fighting tools analyst Rachel Kim highlights in the Javelin report is device recognition. This echoes what Gartner’s “Best Practices in New Account Fraud Detection” reported earlier this year, in which analyst Avivah Litan stated client device identification would become a critical element in online fraud management strategies. Identifying and tracking the devices that cyberthieves use to perpetrate fraud provides an additional layer of protection to a business and their customers. No longer are they relying on potentially stolen or false information provided by fraudsters to trick them into thinking they are somebody else. Focusing on the device – and how it has been used in the past – allows online retailers to quickly identify positive transactions, negative transactions, and flag highly suspicious transactions for review.

Unfortunately, today’s threshold for account creation is still too low. Without the ability to positively recognize a device once it connects to your Web site, there is no way to stop fraudsters from creating new accounts or from repeating the same fraudulent activity on a site. The inclusion of device identification augments existing fraud detection solutions and helps online merchants quickly identify a fraudster’s device or account so they can cut them off in their path.

This entry was posted on Friday, July 25th, 2008 at 1:16 pm and is filed under Online Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.