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Beware Of ECommerce's Riskiest Areas
In a survey taken by CyberSource, eCommerce merchants named New York the riskiest North American metro area for eCommerce.
Nigeria was chosen as riskiest country. By "riskiest", merchants mean that orders from these areas are most likely to be fraudulent (i.e., made with stolen credit cards or with improperly obtained credit card information).
"Highest risk" areas for eCommerce:
U.S./Canadian cities
NYC: 26% of mentions
Miami: 10%
Los Angeles 9%
Chicago, Detroit 3%
SF Bay Area 2%
Countries
Nigeria 31% of mentions
Indonesia 8%
Russia 6%
China 5%
UK, Afghanistan 4%
Impact on named cities/countries
Residents of cities like New York, Miami and other cited centers of fraud may ultimately pay a price for their area's reputation. Online merchants can require purchasers in certain "hot zones" to take more elaborate steps for identification, such as asking the purchaser to make a telephone call to verify the order. Some merchants routinely flag orders from high fraud areas for manual (therefore slower) processing. In extreme cases, such as small merchants struggling to get orders out by the holidays, the order could even be rejected.
"Few merchants will publicly discuss this, but it's no secret that some areas of the country carry tarnished reputations due to a high incidence of eCommerce fraud," says Doug Schwegman, CyberSource director of market intelligence. "It's not fair, but if merchants have gotten routinely burned by orders from one zip code, it's understandable that they will just take longer, harder looks at orders from that location. Many merchants resist overseas demand for the same reason -- orders from outside the U.S. and Canada are three times more likely to be fraudulent, according to our research."
Trans-shippers may be the cause
One reason for the concentration of electronic fraud in distinct areas of the country may be the availability of trans-shippers in those regions. "Fraudsters located in Nigeria, Indonesia or some parts of Eastern Europe now know their orders are going to be denied," according to Schwegman. "There is just too much history of fraud from those parts of the world. So they order to a domestic address where someone will accept the package and forward it to the real location abroad."
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