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For catalogers, payment fraud accounts for a high cost of doing business. On the Internet alone, estimates are that losses from payment fraud exceeded $1.6 billion in 2003.

For direct-response merchants, credit card fraud losses averaged 1 percent of orders in 2003, which may not sound exorbitant, but in terms of total sales, the costs are huge. The good news is that online fraud losses declined from 2.9 percent of total online revenues in 2002 to 1.7 percent in 2003, according to Cybersource Corp./Mindwave Research.