Chip & PIN drives fraudsters online
Online fraud is costing retailers£580 million a year, which could rocket to£5.1 billion by 2010, according to research by Visa voucher firm 3V in conjunction with IMRG.

Almost two thirds of online retailers have fallen victim to internet fraudsters and it is costing some of them about 5 per cent of their annual turnover.

More than a third said they have experienced an increase in fraud since the introduction of Chip and PIN on the high street. About 40 per cent of retailers said the threat of being hit by fraud is becoming a massive concern.

IMRG director of projects and marketing Andrew McClelland said: 'The research from 3V highlights just how serious the problem of internet fraud has become for online retailers. While the industry is rapidly expanding, it 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 of retailers are increasing their online security measures, a fifth feel systems introduced in the past three years by payment providers are placing an increased burden on the consumer. More than 60 per cent said customers have difficulty signing up to the likes of Verified by Visa and Mastercard's SecureCode, citing reasons such as the need to remember multiple passwords.

3V transaction service chief executive Kieron Guilfoyle said: 'The growing use of safe shopping products like 3V Vouchers is good news. We devised a system using randomly generated Visa numbers with security details delivered separately to the customer's mobile phone - effectively creating a Chip and PIN for shopping online.

The bonus for retailers is that there are no changes needed to their software infrastructures, because 3V Vouchers are processed just like a Visa credit card number, so there is no added cost for any retailer to accept the vouchers.'