14 May 2007, 18:18 PM

  • According to a new report, internet fraud is costing retailers £580m a year, which could rise to £1.5bn by 2010.

Research carried out by pay-as-you-go Visa voucher firm, 3V, in conjunction with online retail industry body IMRG**, shows that almost two thirds (64%) of internet retailers have fallen victim to fraudsters, and it’s costing some of them as much as five percent of their annual turnover.

The ‘3V e-Fraud Barometer’ shows that over a third (36%) of retailers have experienced a marked increase in fraudulent activity online since the introduction of ‘chip and pin’ on the high street.

Recent IMRG figures suggest annual online sales could surge to £78bn over the next three years, meaning by 2010 cyber fraud could cost retailers a massive £1.5bn per annum. And, with both sales figures and CNP fraud cases on the rise, more than two in five (43%) retailers said the threat of being hit by fraud is becoming a bigger concern by the day.

Andrew McClelland, director of projects and marketing at IMRG, said, “The research from 3V highlights just how serious the problem of internet fraud has become for the online retail industry. While the industry is rapidly expanding it obviously provides a tempting target for fraudsters.

“Retailers have told us that a range of tools and techniques provide the best defence against fraudulent activity but these should not increase costs significantly, or provide a barrier to legitimate customers.”

While two thirds (64%) of retailers are upping the security measures in place on their websites, a fifth (21%) of them feel systems introduced in the last three years by payment providers are placing an increased burden on the consumer.

Kieron Guilfoyle, CEO of 3V Transaction Services, said: “While some giant steps have been taken by the retail and payments industries in the last few years to combat the problem of CNP fraud, the impact it is having on some e-retailers is immense.”