E-Retailers Rate Nigeria Fraud Central - InformationWeek

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1/31/2007
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E-Retailers Rate Nigeria Fraud Central

But fraudsters will arrange to ship their products from other countries if merchants are denying orders to a particular ZIP code or region, expert says.

Nigeria leads the world as the country most likely to generate fraudulent online orders, a survey published Wednesday said. It's the third straight year the West African nation topped the chart.

CyberSource, an electronic payment provider, polled several hundred e-commerce companies for the survey. Nigeria easily led the list; 31% of those surveyed named it as the riskiest e-retailing country or the one more likely to produce orders with stolen or counterfeit credit cards.

Second was Russia; 9% voted it the most risky in 2006, up from 4% in 2005.

In the United States, New York led the voting with 9% naming it as the riskiest city. That was only half, however, of the 18% who pegged it as dangerous territory in 2005. Miami and Los Angeles came in second and third, respectively, with 7% and 6%.

"With the exception of Nigeria, which seems to own the risky category, what we're seeing is a spreading of the fraud risk both domestically and abroad," said Doug Schwegman, the director of market intelligence at CyberSource, in a statement. "Fraud is a mobile phenomenon, movable from one city or one country to the next. If perpetrators feel that their ship-to addresses are making them vulnerable, if merchants are denying orders to a particular zip code or region, fraudsters can arrange to have their products shipped to them through different intermediary locations."

Some of the steps e-merchants are taking, added Schwegman, include relying on geolocation tools to tell them where an Internet-connected computer, mobile device, or site visitor is, based on the IP address. In 2005, 25% of U.S. merchants used geolocation information; by the end of 2006, said Schwegman, that number had climbed to 35%.

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