Rachel Kim, an analyst at Javelin, told eMarketer that online payment fraud would start to decrease after 2010 thanks to a couple of security measures.
Device recognition is already commonly used by many online banking sites. The security measure identifies when a consumer accesses a site via a computer he or she has not used before. The retailer then asks for additional proof of identity.
Major credit and debit card associations Visa and MasterCard have also created security systems to ascertain online consumers' identities. Ms. Kim said consumer adoption had been slow and suggested online retailers offer incentives to increase use.
Ms. Kim also told eMarketer that although the Internet would continue to attract identity thieves, some of their attention had moved to other channels. She said scammers were renewing efforts to trick people into divulging information by phone.
Javelin said that three out of 10 fraud victims had decreased their online shopping. Additionally, the potential for card fraud gives pause to some would-be online buyers.
A dip in online card fraud would be welcome news for both merchants and consumers. Online merchants in North America lost $3.6 billion to online payment fraud in 2007, according to CyberSource's "Online Fraud Report," conducted by MindWave Research.
On the consumer side, more than seven out of 10 adult Internet users in the US surveyed by the Pew Internet & American Life Project said they did not like giving out their card numbers and personal information online.
The Internet Crime Complaint Center reported in April 2008 that even though there was a small drop in online payment fraud complaints filed by consumers in 2007, the total dollar loss had never been higher, at $239.09 million in 2007 versus $198.44 million in 2006.
