Miami Poses Greatest Online Risk

For many, South Florida, particularly Miami, evokes pleasing thoughts of palm trees, cold drinks and fun in the sun. But for multichannel marketers, the city raises a red flag. According to a survey of 318 online merchants by CyberSource, a provider of electronic payment, risk and security management solutions, Miami is the highest-risk area for online fraud in the U.S. Orders from this city have the highest probability of being fraudulent.

With 10 percent of the vote, Miami edged New York (8 percent), which held the top spot the previous two years. Here are some other noteworthy findings of the survey:

* Other cities receiving votes included Los Angeles, Chicago, Detroit, Atlanta, Washington, D.C. and San Francisco;

* For the third year in a row, Nigeria (27 percent) was by far rated the highest-risk area for online fraud outside the U.S. and Canada, followed by the U.K. (8 percent), Ghana (7 percent), Indonesia (6 percent), China (5 percent), Singapore (4 percent), and Mexico and Vietnam (3 percent each);

* Approximately $3.6 billion in online revenue was lost to fraud in 2007, up from $3.1 billion in 2006;

* On the other hand, the percentage of online revenue lost to payment fraud has been slowly declining, from 1.8 percent in 2004 to 1.4 percent in 2007;

* The overall average fraudulent order rate was 1.3 percent, up from 1.1 percent in 2006;

* The overall order rejection rate due to suspicion of fraud was 4.2 percent, slightly up from 2006 (4.1 percent); and

* 82 percent of merchants are manually checking orders today, with one out of every three orders being checked on average.