New study predicts growth in online fraud
A report conducted by the Centre for Economic and Business Research claims that the cost to the UK economy of e-commerce fraud is expected to grow by £30 million by 2015 as mobile phones and social networking sites create new opportunities for criminals.
“The rise of new e-commerce channels: Shoppers Delight or Gangsters Paradise?” report conducted on behalf of PayPoint.net, said the impact of e-commerce fraud on the UK economy is likely to rise by 18%, from £165.2 million in 2011 to £195.3 million in 2015. This is largely due to new payment channels being more vulnerable to fraudulent activity during the years of early adoption, as it takes time to discover and resolve underlying security issues.
According to the report, the growth of mobile and social media shopping is expected to drive total online sales to £33.7 billion by 2015, an annual growth of 4.5%. It also forecasts that the number of internet users purchasing products via their mobile phones will rise by five million, to 10.5 million, by 2015, while social media is also expected to be a growth area, with an additional 2.9 million users making shopping purchases through these channels by 2015.
Since its peak in 2008, the economic impact of e-commerce fraud has declined, falling by 16% in 2009 and a further 4% in 2010 as businesses adopted more secure payment mechanisms and fraud screening detection tools. However, the introduction of new online shopping channels will reverse this trend, according to the report, and shopping through social media sites, mobile browsers and apps is expected to be the biggest contributor to the losses, costing £24 million by 2015.
Michael Norton, Managing Director of PayPoint.net, commented: “Shopping on a mobile phone or favourite social media site is the next big thing in e-commerce, but criminals are likely to capitalise on poor awareness of the risks by consumers and retailers alike. This study shows these new ways of shopping could be victims of their own successes for all the wrong reasons. The next few years will be a period of trial and error as mobile and social media commerce evolves in the UK.”
He added: “These large increases in fraud could have a big impact on retailers, as they find themselves having to watch for (and subsequently account for) new kinds of fraud they haven’t seen before. It will be more important than ever for online retailers to have a robust, traditional e-commerce fraud prevention system in place so that best practice strategies can be rolled out to the new shopping platforms.”
Further information can be found in the full report: http://www.paypoint.net/new-payments-report
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