U.S. merchants lost an estimated $2.6 billion to online fraud in 2004, a 37% increase over the 2003 estimate, according to a study released by CyberSource Corporation. The rate of fraud as a percentage of online revenues has not increased from last year, but an increase in online sales leads to an increase in fraud losses. This year’s losses are estimated at $700 million more than in 2003.
Mid-range companies with annual online revenues between $500,000 and $5
million are expected to be hit the hardest, losing up to 2.5% of online revenue to fraud, compared to 1.9% last year. Larger companies with revenues between $5 million and $25 million will experience a loss rate of 1.5%, the same as last year’s. Companies with annual revenues greater than $25 million anticipate losses of 1.1%, slightly less than last year’s 1.3% loss rate. For a copy of survey results, go to www.cybersource.com/fraudreport/.