US Online Credit Card Fraud Up A Staggering 11%

Fraudulent use of credit cards, the biggest area of online loss for many US retailers, is up by 11% since last year, a leading industry survey has revealed.

Launched last week at the NRF Loss Prevention Conference and Expo in Fort Lauderdale, the US Retail Fraud Survey 2014 has reported a substantial increase in online credit card fraud.

Published by Retail Knowledge and sponsored by intelligent cash handling experts Volumatic and payment experts Kount, the US Retail Fraud Survey 2014, now in its second year, is the most extensive report into the systems, processes and strategies of 100 of the US’s top retailers.

The latest report shows that, currently, online sales account for an average of 6% of sales. In the next three years retailers are estimating to achieve 15% of sales to be made online. Considering this anticipated rise in online sales and the dramatic increase of online credit card fraud, the role of online fraud prevention will be even more important. Vice Presidents of Loss Prevention will need to be more involved in profit protection in all sales channels, not just stores.

Don Bush of Kount, one of the US Retail Fraud Survey sponsors, commented on the latest online figures from the survey: “The good news is that the problem of online fraud is beginning to be taken more seriously. As this survey report will illustrate, spend on online fraud prevention rose by over 50% yoy as a percentage of sales compared with in-store fraud prevention which actually saw a decrease in spend.”

He further commented: “It is not all good news though – fraud is still very prevalent and credit card fraud is still a big issue faced by retailers, detecting, preventing and managing fraud is a full time vocation and getting the people, processes and technology right to beat fraud is crucial.”

James Harris of Volumatic, the other US Retail Fraud Survey sponsor, underlined the value of the Survey, saying: “I am confident that the outputs of this survey will help the loss prevention community benchmark themselves against their contemporaries and to identify opportunities to engage with their businesses, as well as each other, to win back some of the multi-billion dollar hole in profits that is being created through shrinkage.”

There are some important changes to the Survey this year. Detailed results are now only available to those retailers who took part. And a new anonymous section has been introduced to aid the quality and availability of the most sensitive data. These changes will further help retailers to benchmark, plan for future developments and react appropriately to fraud in general.

For more details on the US Retail Fraud Survey 2014’s key findings see the attached Executive Summary.

Retail Knowledge, who carried out the Survey, work with high street retailers providing bespoke consultancy services to protect their bottom line.

Survey sponsor Volumatic is a global leader in the manufacturer of intelligent cash handling equipment, protecting over $2B of cash every day throughout North America, Europe and the rest of the world. Their customers in the retail, banking and leisure industries use Volumatic products to enhance security, reduce shrinkage and deliver process efficiencies.

Survey sponsor Kount helps businesses boost sales by reducing fraud. Their all-in-one, SaaS platform simplifies fraud detection and helps online businesses accept more orders. Kount’s turnkey fraud platform is easy-to-implement and easy-to-use. Kount’s proprietary technology has reviewed hundreds of millions of transactions and provides maximum protection for some of the world’s best-known brands. Merchants using Kount can accept more orders from more people in more places than ever before. For more information, visit www.kount.com

This study is based on primary research, carried out between April and May 2014, into the systems, processes and strategies used by 100 of North America’s leading retailers. Detailed interviews with the Loss Prevention director or manager for each company in the report were carried out. We also interviewed the e-commerce director or manager about their online fraud prevention systems and strategies where if the Loss Prevention director was not able to provide the relevant information.

This study represents retailers with annual sales totaling $864B; 19% of the total North American retail sector by sales value and encompassing 126,000 stores.