Thirty-six percent viewed online fraud as somewhat significant. The survey listed 11 fraud prevention tools and asked merchants whether they utilized them and which they rated as most effective at reducing online fraud. Interestingly, although 54 percent of respondents listed customer follow-up as a tool they use to combat fraud, only 38 percent viewed it as most effective. The least utilized tool was a custom-built neural network, with only 12 percent of merchants indicating they use this fraud prevention method. It is clear that online merchants view fraud as a serious problem, but the good news is that many merchants seem to be taking steps to prevent it, said Ayesha Almeida, Vice President for Online Usage and Marketing, American Express and Network co-chair.
Merchants taking the survey represent large, medium and small online sites.
Sixty percent of merchants reported they spend less than one percent of total revenues on fraud prevention . Nineteen percent listed about one percent of revenues, and 10 percent reported they spend more than three percent of revenues on fraud prevention. Online merchants should understand that a layering of fraud prevention technology and techniques is the most effective course. This month, the Network s Web site offers a Gartner white paper on online fraud prevention, which indicates that transaction-screening software can help merchants reduce fraud by up to 60 percent. This comprehensive report from a leader in research and analysis includes a review of some of the fraud prevention software available on the market today.