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E-crime costs UK retailers £205.4m in a year

Tahmina Mannan
Written By:
Tahmina Mannan

Internet crime is the biggest emerging threat to the retail sector as the e-commerce industry experiences unprecedented growth despite the backdrop of on-going recession.

According to a survey by the British Retail Consortium’s (BRC), e-crime costs retailers an estimated £2.05.4m over the past year, including £77.3m in losses from falling victims themselves as well as fraud prevention costs.

Stephen Robertson, director general at BRC, said: “Online retailing has the potential for huge future commercial expansion but Government and police need to take e-crime more seriously if the sector is to maximise its contribution to national economic growth.

“Retailers are investing significantly to protect customers and reduce the costs of e-crime but law makers and enforcers need to show a similarly strong commitment.”
In proportion to the total value of sales, e-crime is twice as costly as overall retail crime.

At £205.4m, e-crime represents 0.75% of the £28bn of online retail sales in 2011. The £1.4bn cost of retail crime as a whole is 0.36 per cent of the £303 billion value of all retail sales.

BRC say that 64% of e-crime is committed by perpetrators within the UK, however point to the survey only having polled UK businesses.

The most expensive type of e-crime for retailers was personal identification-related frauds.

These produced £20 million of losses in 2011-12. Card fraud was in second place, with £15 million losses to retailers during the same period.

Refund frauds were responsible for £1.2 million in losses.

Other categories of internet crime which are a particular problem for UK retailers, but harder to quantify, include phishing (bogus websites). After the USA, UK brands and companies are the second most targeted in the world.

Robertson cntinued: “Law enforcement and the Government need to work with us to develop a consistent, centralised method for reporting and investigating e-crime and resources must be directed to e-crime in line with the emerging threat.

“This will encourage retailers to report more offences and allow the police to better identify and combat new threats.”

Retailers also lost £111.6m to e-crime as a result of genuine business being rejected because of crime-prevention measures.

For example, customers may be deterred from continuing with an online purchase by additional online security measures.

The UK is one of the top online retail countries with the biggest internet spend per-capita of any nation and 11% of global internet retail sales.

But the BRC say that many retailers lack confidence in the official response to e-crime. Of those questioned in the BRC survey, 60 per cent said it was unlikely they would report any more than 10 per cent of e-crimes to police.