LONDON--(Marketwire - Aug 7, 2012) - 41st Parameter, the global leader in fraud detection and prevention, warns that online retailers may be at heightened risk for fraud during the 2012 London Olympics. High transaction volumes coupled with a demonstrably poor fraud prevention track record in the United Kingdom mean the Games may contribute to higher than anticipated losses. Only the most sophisticated fraud detection systems will be able to protect retailers while thwarting the "bad guys."
Whenever consumer spending goes up -- whether it's due to holidays or major events such as the Olympics -- merchants are faced with a series of unsavoury options:
- Increase their fraud threshold and experience significantly increased transactions, but risk sometimes unmanageable manual review rates
- Increase additional auto-rejects on "risky" cross-border transactions, but face increased false positives, customer insult, and miss revenue opportunities
- Decrease fraud thresholds to allow more commerce through and capitalise on revenue opportunities but risk experiencing additional fraud losses due to increased attack rates
Inevitably retailers choose the latter: decrease fraud thresholds in order to take advantage of the increased commerce. With this in mind, cybercriminals increase their activity, as they know it will be easier to pass through risk engines undetected.
Especially since chip-and-pin has made offline fraud more difficult across Europe, the online retailers truly are the most at risk. While many countries in Europe have limited online payment options, the UK offers several payment methods online, further increasing the threat. The UK also has an extremely high baseline level of fraud activity -- with losses in 2011 amounting to approximately £30B [$47B US] out of a £1T economy [$1.57T US] -- which only exacerbates the problem.
"It would be a mistake to underestimate the scope and nature of the threat," said David Britton, vice president of industry solutions at 41st Parameter. "In 2011, the United Kingdom saw online fraud losses of approximately 3 percent of the overall economy. For comparison, online fraud losses in the United States were approximately .02 percent of the overall economy. For British retailers hoping to capitalize on the Games, this is a serious and massive problem."
While the eyes of the world are fixed on the London Olympic Games, fraud prevention experts have their eyes on cybercriminals. Knowing what fraudsters will do allows for heightened vigilance, but traditional prevention methods will be less effective in today's environment. However, solutions that incorporate intelligent rules and a smarter approach to identifying devices can help retailers win.
"It is a very serious issue that requires ongoing vigilance," continued Britton, "but the reality is that consumers and retailers are being targeted by fraudsters even as we speak. It requires sophisticated measures -- combining device recognition, cross-border transactions and complex fraud rules engines -- to catch the fraudsters before they reach the finish line."
About 41st Parameter
In a world where people are increasingly reliant on a variety of Internet-connected devices for everything from banking to shopping to entertainment and media, creating relevant customer experiences and preventing online fraud are constant business challenges. 41st Parameter, the global leader in device recognition and intelligence, combines patented technologies and years of expertise to identify devices without cookies, without compromising privacy and without impacting performance. AdTruth, the digital media division, gives marketers a better way to recognize and reach their most valuable audiences across all types of devices. The company's FraudNet platform protects businesses from fraud before it happens. These privacy compliant solutions help keep the Internet more secure and relevant for everyone.