More than a third (35 per cent) of businesses have experienced fraudulent activity in the past year, according to a study by Sage Pay.
Despite 55 per cent of consumers citing security as their top priority when it comes to payments, almost a third (32 per cent) of businesses don’t spend any money on fraud prevention.
This is despite the average annual investment on fraud prevention of £1,881 being around half the average cost of fraud.
Some of the tools and checks that come as standard with payment gateways aren’t actually being used, with less than a quarter (22 per cent) using CV2. Meanwhile 21 per cent of businesses use in-house experts to tackle fraud.
As total card and online spending rises, scams and computer attacks are driving an increase in fraud. The latest figures from Financial Fraud Action UK show that fraud losses on UK cards totalled £450.4 million in 2013, a 16 per cent increase on 2012, representing 7.4p for every £100 spent.
Sage Pay managing director Sean Wilson says, ‘Ignoring [fraud] not only puts your business at risk, it can also drive away customers who are already sceptical about shopping online due to security concerns.
‘There seems to be a misconception about the value of investing in the tools and systems that will allow businesses to protect themselves against fraudulent activity, but our research makes it clear that it is very much worth the initial cost when you consider the potential savings.’
In order to reduce online card and identity fraud, Sage Pay encourages businesses to analyse customer information and purchasing behaviour to assess a customer’s profile, order and delivery details before accepting a transaction.
The company also warns of orders that are placed late at night or early in the morning, and orders of high quantity or value, particularly if the product is easily resalable.
Checking that the delivery address is valid, investing in geo-location technology to find the shopper’s exact location, and maintaining a fraud database to track breaches and help you close loopholes are also procedures Sage Pay recommends.