But the crooks are still coining millions and creating new cons…
London, (PaymentsMarket ) - Wising-up to the need for effective fraud prevention seems to be paying off for many of Britain’s retailers.
For the second year running the UK has seen a significant drop in the value of online, mail order and telephone order fraud, which fell by an estimated 10% to £239 million in 2010, compared with £266 million in 2009.
According to figures from industry expert Retail Decisions (ReD), a world leader in payment fraud prevention, the money lost to the most prevalent type of plastic swindle - card-not-present (CNP) fraud - has fallen progressively since hitting a peak of £328 million in 2008.
But it’s not that the con men are cutting back on their scams – it’s because more fraud is being foiled, with the majority of retailers now protected by some method of fraud screening. ReD reports that although criminals are pocketing less they are still as active and inventive as ever, and last year attempted a further four times more fraud that didn’t succeed.
The fact that they didn’t get away with it is due to retailers now screening transactions more carefully. So, although ReD predicts that 2011 will see a further – albeit less significant - drop in CNP fraud, this industry heavyweight is advising against complacency.
ReD points out that there are financial implications for anyone considering an off-the-peg, ‘one-size-fits-all’ solution. A basic fraud protection system may block suspicious cards, but unless it is tailor-made for the retailer’s needs, it may also unnecessarily bar authentic ones. One merchant’s crime-proof fence will be another retailer’s customer failure – and disgruntled potential shopper, who will buy elsewhere. Without fine-tuned security what money is saved in foiled fraud is lost to rejected revenue.
An additional danger is growing because consumers are becoming more demanding in receiving goods swiftly. As the timescale between order, acceptance and delivery shortens so does the need for effective, instantaneous fraud recognition.
Carl Clump, CEO of ReD, also warns that retailers need to stay one step ahead of the invisible, and increasingly inventive, criminals.
“Fraudsters are continually adapting to overcome fraud prevention techniques and they communicate constantly in the criminal underworld to share scams. So retailers need a fraud prevention strategy that not just keeps pace, but is one step ahead of the fraudsters. To be truly effective a system needs to be able to spot trends as they are emerging – not just identify them once they’re active.”