| What do New York and Nigeria have in common? | | | | according to our research." |
| Something far more serious than beginning with the | | | | Tracing the Origins |
| letter "n." Both of these regions have earned the | | | | VeriSign (Nasdaq: VRSN) Vice President of Payment |
| dubious distinction of ranking among the riskiest | | | | Services Trevor Healy told the E-Commerce Times |
| places in the world for e-commerce, according to a | | | | that numbers can often be deceiving. Before |
| survey by CyberSource Corporation (Nasdaq: CYBS) . | | | | merchants spend time and money on fraud efforts, |
| The Big Apple (Nasdaq: AAPL) was chosen as the | | | | he said, they need to understand the origin of the |
| riskiest North American metropolitan area and Nigeria | | | | fraud. |
| was chosen as the riskiest country. Merchants | | | | "Most of the fraud comes from within the U.S.," |
| defined "riskiest" as meaning that orders from these | | | | Healy said. "It is not exactly true that there are evil |
| areas are most likely to be fraudulent (that is, made | | | | people in Vietnam and Russia that are a threat to our |
| with stolen credit cards or with improperly obtained | | | | online commerce environment. One has to investigate |
| credit card information). | | | | the initial impetus for the fraud." |
| Other U.S. cities in the top five include Miami, Los | | | | Experts said one reason for the concentration of |
| Angeles, Chicago/Detroit (tied for fourth place) and | | | | electronic fraud in distinct areas of the world might |
| the San Francisco Bay Area, respectively. Indonesia, | | | | be the availability of trans-shippers in those regions. |
| Russia, China and the United Kingdom/Afghanistan | | | | "Fraudsters located in Nigeria, Indonesia or some |
| (tied for fifth place) round out the top five | | | | parts of Eastern Europe now know their orders are |
| international e-commerce risks. | | | | going to be denied," Schwegman said. "There is just |
| Impacting E-Commerce | | | | too much history of fraud from those parts of the |
| "Few merchants will publicly discuss this, but it's no | | | | world. So they order to a domestic address where |
| secret that some areas of the country carry | | | | someone will accept the package and forward it to |
| tarnished reputations due to a high incidence of | | | | the real location abroad." |
| e-commerce fraud," Doug Schwegman, CyberSource | | | | Automating Fraud Protection |
| director of market intelligence, said. | | | | While smaller merchants might be doing manual |
| Residents of cities like New York, Miami and other | | | | checks to prevent fraud protection, experts said the |
| cited centers of fraud might ultimately pay a price | | | | ultimate solution must be automated if an e-tailer is |
| for their area's reputation, but it also costs the | | | | going to grow in today's business environment. Healy |
| merchant. Online merchants might require purchasers | | | | warned that if a merchant is hacked and credit card |
| in certain "hot zones" to take more elaborate steps | | | | numbers are stolen, then the merchant will lose his or |
| for identification, such as asking the purchaser to | | | | her privilege to process credit card payments and |
| make a telephone call to verify the order. That is an | | | | potentially will go out of business. |
| inefficient practice for both the buyer and seller that | | | | Dave Alampi, vice president of product marketing |
| goes against the very grain of e-commerce. | | | | and management for e-commerce service provider |
| Schwegman said some merchants routinely flag | | | | Digital River (Nasdaq: DRIV) , told the E-Commerce |
| orders from high fraud areas for manual (therefore | | | | Times that a combination of automated fraud |
| slower) processing. In extreme cases, where small | | | | screening tools that uses rules-based math to flag |
| merchants are struggling to get orders out by the | | | | potentially fraudulent orders should precede manual |
| holidays, the order could even be rejected. | | | | checks to get the best results. |
| "It's not fair, but if merchants have gotten routinely | | | | "The goal is to balance fraud-out orders [canceling |
| burned by orders from one ZIP code, it's | | | | the order] that are truly fraudulent without frauding |
| understandable that they will just take longer, harder | | | | out orders that are not fraudulent," Alampi said. "If |
| looks at orders from that location," Schwegman said. | | | | you lock down the fraud rules too tight, you will |
| "Many merchants resist overseas demand for the | | | | actually be missing some potentially significant |
| same reason. Orders from outside the U.S. and | | | | revenue opportunities. It's an ongoing balance and it |
| Canada are three times more likely to be fraudulent, | | | | does vary by country. |