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The cost of e-crime: a wake-up call for the retail industry?

The recent findings of the British Retail Consortium’s first e-crime study which estimates that UK retailers lost over £205 million in 2011-2012 due to e-crime caught my eye recently – particularly the estimate that £77.3 million came from actual fraud losses.

The most costly form of e-crime for retailers was personal identification-related fraud, amounting to a total of £20 million in losses. Card fraud came in second place, with £15 million in losses, while refund frauds were responsible for £1.2 million.

The BRC warns that although the UK has the biggest Internet spend per-capita of any nation - and 11% of global online retail sales - the government and police need to take e-crime more seriously if e-commerce is to fulfil its potential in boosting the economy.

In response, the BRC are calling for consistency on reporting, recording and investigating e-crime across the country and more police resources.

However, while I am in agreement that the government and law enforcers do need to step up to the challenge, that in itself is not enough. The retail industry too needs to play a more active role in tackling this growing issue to ensure the UK can reach its e-commerce potential. I say this because astonishingly 60% of those surveyed stated that it is unlikely they would report any more than 10% of e-crimes to the police.

Retailers need to start working more closely with security and fraud specialists to build in a multi-factor and multi-layer authentication approach that incorporates visible and invisible layers of security. This creates a complex but flexible security model that makes it extremely difficult for fraudsters to compromise, but doesn’t hamper customer experience.

Despite the concern raised by the BRC report, let’s not forget about the plans of the European Cyber Centre (or EC3) to help protect Europeans and businesses against mounting cyber-threats by focusing on illegal online activities carried out by organised crime groups. My thoughts on this initiative are that it is a perfect backdrop against which to promote an awareness campaign to educate and fight cross-channel fraud, whilst as an industry we move to a new paradigm of fraud detection and prevention.

 

 

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Pat Carroll

Pat Carroll

Founder/Executive Chairman

ValidSoft

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