This finding, by Martec shows the growth of cyber attacks in comparison to eCommerce in 2012. Despite this growth, says the report, which questioned 100 leading UK retailers, retailers aren’t taking fraud as seriously as they should, and as a result smaller retailers have paid seven times more than they should in chargeback fees.
The study found a disjointed approach to fraud prevention, with the responsibility for this area typically in the hands of more than three or four people across a retail business. Some 22% of respondents were unable to say how much they spent on online fraud prevention, while mass merchants were spending 1.4% of sales on this area and small format retailers 0.3% of annual sales.
But failure to invest means that some retailers are paying more than they should in chargebacks, the report said, with small format speciality retailers, such as high street boutiques, typically paying seven times the average chargeback rate seen by the Merchant Risk Council.
Don Bush, vice president of marketing at Kount, which sponsored the report alongside Volumatic, said: “Chargebacks are a major problem for online retailers and can impact and escalate in several ways, including fines from the bank or payment provider which can lead to even higher fines imposed by exceeding the chargeback limit and in a worst case scenario a complete loss of online payment options, resulting in the loss of a business.”
Bush continued “What this study has done has highlighted the problem and allowed retailers at an industry level to discuss their fraud problems in a safe environment. What is clear is that there is still work to be done for retailers to combat cybercrime the alternative is potentially going bust.”
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