Category Archives: online retailers

Annual Fraud Report Hot Off the Press

I got the early edition of Cybersource’s 9th annual fraud report today. I haven’t had time to fully absorb/read all of the information but there were some facts that jumped out at me:

  • 82% of merchants are manually checking orders today with 1 out of 3 orders being manually reviewed. Merchants also indicated that over three-fourths of the orders manually reviewed were accepted.
  • Online merchants increased their spending on manual review staff in 2007 by as much as $100 million.

What does this mean? Online merchants still need to embrace automated fraud detection tools including identity verification to keep pace with the growing ecommerce trends. Of course, the report did cover fraud detection tools as well.

  • More than three-fourth’s of the merchants said they use 3 or more fraud detection tools with the average being 5.
  • The two that top the list are Address Verification (80%) and Card Verification Number (74%). The 3rd tool choice, which is Company Specific Fraud Screens, shows a significant usage drop to 39%.
  • 6% are using out-of-wallet or in-wallet challenge questions

What does this mean? More education is needed about identity verification including KBA solutions. Merchants need to understand the limitations Address and Card Verification Solutions have when it comes to fighting fraud and how using both basic id verification combined with KBA in scenarios where higher verification is needed reduces the need for manual review. We developed a whitepaper specifically for retail merchants last quarter that addresses these issues. I think it is probably time I talk with the marketing department about promoting that paper a bit more…


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Filed under fraud, Identity verification, knowledge based authentication, online retailers

The Most Wonderful (time of the) Year for Online Retailers

The New York Times reports today that:

When the receipts are tallied from this holiday, American consumers will have spent around $29.5 billion at Internet shops, according to projections published by comScore, a market research firm.

And according to Bloomberg:

Online spending growth outpaced total U.S. retail gains. Internet purchases from Nov 1 through Dec 21 increased 19 percent from a year earlier to $26.3 billion, ComScore Inc. said on Dec. 23.

Bloomberg also reports that bricks and mortar retailers are still slashing prices in hopes of avoiding the worst holiday season since 2002.

In comparison, Amazon claims this was the “best season ever.” And while the actual numbers weren’t released, Amazon had some interesting facts to share about their sales that I found both in their press release and in this New York Post article:

  • The busiest day was Dec. 10, when customers ordered 5.4 million items – 62.5 per second.
  • The Nintendo Wii flew off the virtual shelves at a rate of 17 per second
  • It sold enough high-def DVD players to cover seven football fields; auto wrenches to stretch all the way around the Daytona 500 track; and Hannah Montana wigs to outfit the entire audience at her Dec 20 show in Providence, RI.
  • The top DVD stocking stuffers included “Harry Potter and the Order of the Phoenix,” “Planet Earth: The Complete BBC Series,” and “Pirates of the Caribbean: At World’s End.”
  • Top books included “Eat, Pray, Love” by Elizabeth Gilbert and “I am America (And So Can You)” by Stephen Colbert.

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    Filed under 2007 holiday sales, Amazon, holiday shopping, Internet shopping, online retailers