Merchant Risk Council Announces Results of Annual E-Commerce Fraud Survey

Business Wire, March 4, 2008

MRC Platinum Merchants Continue to Lead Online Industry in Fighting Fraud

LAS VEGAS -- The Merchant Risk Council (MRC), the retail industry's leading trade association for promoting secure e-commerce in global online payments, today announced the results of its annual merchant fraud survey. The survey was sponsored by CyberSource Corporation as part of its broader annual survey of online fraud benchmarks. The combined results show MRC Platinum Merchants are consistently outperforming other online merchants in controlling fraud and protecting valid customer orders.

MRC Platinum Merchants are 120 of the largest Internet retailers in the U.S. who share risk management best practices through educational programs, committees and conferences. The results of the survey will be presented in-full at the 6th Annual MRC Conference on March 4, 2008 in Las Vegas.

Platinum merchants participating in the survey report an average of 0.8 percent of their total revenue is lost to online fraud, compared to 1.2 percent for other large non-member merchants (with greater than $50 million in online sales) and 1.4 percent for the overall sample. With MRC Platinum Merchants estimating $75 billion in online sales, a 0.4 percent lower revenue loss rate translates into $300 million in protected sales.

According to the survey, MRC Platinum Merchants also maintain the lowest fraudulent order rate, with 0.56 percent of accepted orders later proving to be fraudulent, compared to 0.67 percent for other large online merchants and 1.3 percent in the overall sample. Fully half of Platinum merchants reported fraudulent order rates of 0.2 percent or less.

"The survey results demonstrate that MRC Platinum Merchants continue to surpass non-MRC online merchants in fraud and risk prevention," said Tom Sullivan, MRC Board Chair and Sr. Director, Global Payments & Risk, Expedia, Inc. "These brands are the most aggressive at battling fraud, and as a result, the most successful."

To achieve these results, MRC Platinum Merchants have consistently incorporated more fraud detection tools and more automation in their order processes. The survey indicates that MRC Platinum Members use an average of 8.2 fraud tools, compared with 6.8 among other large online sellers and 5.4 in the overall sample. MRC Platinum Merchants also have the lowest rate of manual order review with an average of 13 percent of orders manually reviewed to screen for fraud which marks a decrease from 14 percent in 2006. In the survey, large non-MRC merchants show a 15 percent rate for manual review. In the overall sample, the manual review rate reached 33 percent. Manual review represents more than half of fraud management budgets for online merchants and can delay orders and limit growth

"Platinum Merchants employ the most tools and best techniques to manage payment risk and are able to maximize the efficiency of the tools," added Sullivan. "The results continue to show how Platinum Merchants benefit from MRC education, committees, conferences, and peer networking opportunities."

The survey results will be presented at the Merchant Risk Council's 6th Annual Conference, "Partners in Progress: Mitigating Risk," at the Wynn Las Vegas.

About The Survey

The MRC Platinum Fraud Survey was conducted as part of the Ninth Annual CyberSource Fraud Survey, sponsored by CyberSource Corporation and conducted by Mindwave Research. The survey was fielded September 13 through October 1, 2007 and yielded 318 qualified and complete responses, of which 57 were MRC Platinum Merchant Members. The sample was drawn from a database of companies involved in e-commerce activities.

About The Merchant Risk Council

The Merchant Risk Council (MRC), the retail industry's leading trade association for preventing online fraud and promoting secure e-commerce, is dedicated to working with merchants and law enforcement to make the Internet a safer place to do business. The MRC's mission is to foster a secure e-commerce environment and ensure the Internet is a safe and preferred place to shop and do business. The MRC is made up of more than 7,500 members including 120 of the world's largest Internet retailers who account for approximately 30 percent of all e-commerce revenue. The MRC is headquartered in Seattle, Washington.

The Board of Directors and Advisors consists of leading industry professionals, e-commerce retailers, solution providers and financial institutions and includes representatives from Expedia Inc., Adobe Systems, Inc., Neiman Marcus Direct, Apple, BestBuy.com, Blizzard Entertainment, Chase Paymentech, CyberSource Corporation, Discover Network, Gap Inc. Direct, iovation, Microsoft, Neopets/MTV Networks, T-Mobile USA, Inc., The 41st Parameter, Trustwave, and Visa Inc.

To learn more about the MRC, visit: www.merchantriskcouncil.org