Research from FICO, the software company that analyses business’ growth and profitability, has shown a rise of 18% in ecommerce fraud in 2015 according to its latest research.

The dominant type of fraud is predictably card not present (CNP).

Fraudsters search for the softest targets and with the introduction of EMV in the US, criminals looking for easier pickings have switched their attention to CNP. EMV is not impervious to fraud, as criminals try to exploit newly found weaknesses in security, but fraudsters always follow the path of least resistance. If we take into account the rise in online purchases using cards, then the industry is faced with the perfect storm when it comes to fraud.

Ecommerce is the fastest growing retail market in Europe and North America. Online sales in the UK, Germany, France, the Netherlands, Sweden, Italy, Poland and Spain grew from $156.28 bn in 2014 to $185.39 bn] in 2015, an 18.6% rise.

Online sales are expected to grow again to reach $216.32 bn in 2016 (a 16.7% rise) and $250.28 bn in 2017, so the situation is only going to become more acute if the industry does not confront the problem now.

Europe has borne much of the brunt of the fraudsters’ attention, as we have previously predicted, with the UK feeling the pain far more than most. Indeed, the UK contributed 43 % of the total card fraud losses across the 19 European countries studied.

The rise in UK card fraud equates to an additional £88.5 million loss and as much as 75% of that increase was CNP fraud.  Moreover, £42.4 million of CNP fraud came from ecommerce.

The retail community needs to take note and act now.

There are simple steps that merchants can take now to have an immediate impact on chargebacks as fraud continues to rise:

  1. Concentrate on high levels of customer service and maintain impeccable records, so retailers can disprove fraudulent claims of non-delivery.
  2. Make sure logistics chains ensure speedy delivery of goods.
  3. Be proactive in looking for potentially fraudulent transactions such as large orders and new delivery addresses.

The US is still in the early days of EMV so we expect this trend to continue for a good while yet. The good news is that if we fight it together with determination we will prevail, sooner rather than later, and weather the storm.