Online retailers are losing on average 1.2% of their total revenue to online fraud. That’s according to a recent survey conducted by the Merchant Risk Council and reported in the article, “Fraud is costing online merchants 1.2% of revenue, survey finds.” Not surprising, the more automated fraud screening tools a company used, the lower their fraud rates were.

For large online merchants that used 7.9 fraud tools, fraud losses dropped to 0.9% of their revenue compared to the 4.7 average tools for all survey respondents. Reported fraud rates for international orders were also lower for large online retailers by a 1.4% to 2% margin, compared to all companies who participated in the survey.

The findings suggest that the more companies invest in a comprehensive, defense-in-depth approach, the more success they have in reducing fraud losses and boosting their profitability.

“The fewer tools that are used on the manual and automatic side, the higher the fraud rates are,” said a council spokesperson. “Also, collaboration is proving to work. We see that when retailers work with other retailers, the best practices they learn from each other are invaluable.”

iovation has been a longtime advocate of collaborating with your peers and deploying an effective, multi-layered approach to fraud prevention. According to the survey’s findings, it also pays off.

This was a key theme this week at MRC’s 2010 e-Commerce Payments and Risk Conference, where industry leaders delivered  insight on the growth, diversity and risks associated with online payment trends, managing and reducing chargebacks, identifying global cyber threats, and utilizing the latest and most advanced fraud prevention tools.

Tags: anti-fraud tools, merchant risk council, Online Fraud, online merchants

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