There are many changes taking place in the world of ecommerce. And one of the most important, for ecommerce businesses, is fraud management. Cybersource recently released its 2008 Fraud Report, and its results are interesting. Some of the findings of the ecommerce fraud reports include the following:

• Percent of online revenues lost to fraud is down to 1.4 percent from 1.8 percent in 2004.
• Internet revenue lost to fraud in dollars, though, is up to $3.6 billion from $2.6 billion. The growth of ecommerce results in more dollars lost, even as percentages decrease.
• International orders are more than twice as likely to be fraudulent as domestic orders.
• Manual review rates for fraud are on the rise again in 2007 to 27 percent, from 23 percent in 2006.

Ecommerce fraud management needs an efficiency increase

With manual review rates on the rise since 2006, it is clear that ecommerce fraud management is becoming increasingly important. The Cybersource reports points this out about ecommerce fraud management:

As online eCommerce sales continue to grow 15% to 20% per year, merchants face the growing problem of screening more online orders. . . Only 20% of online merchants report having budget to increase manual review staff in 2008 to cope with higher order volumes. Therefore, each year, merchants must increase fraud management efficiency approximately 20% just to keep pace.”

So, even though the percentage of ecommerce revenue lost to fraud is decreasing, the growth of ecommerce means that in numbers, there is more fraud to deal with. However, it is difficult to find the budget to provide the personnel to keep up with the need for manual review. Indeed, in 2007, Cybersource reports, ecommerce businesses increased spending on staff for manual review by around $100 million.

It is obvious that in order to keep up with the needs of fraud management efficiency many ecommerce businesses will need to turn to automation. Some sort of integration between manual review and a certain level of automated fraud risk detection will be needed. Otherwise, fraud detection and management will not be able to keep pace with ecommerce growth.