Miami Tops New York City For E-Commerce Risk - InformationWeek

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1/28/2008
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Miami Tops New York City For E-Commerce Risk

After Miami, survey respondents cited New York; Los Angeles; Chicago; Detroit; Atlanta; Washington, D.C.; and San Francisco.

Miami has overtaken New York as the U.S. city with the highest perceived risk of online fraud, according to a study released Monday. Nigeria, meanwhile, continues to be seen as the riskiest source for e-commerce transactions worldwide.

The study was commissioned by CyberSource, a company that sells fraud-protection products and services, and was conducted by Mindwave Research. It took place between Sept. 13 and Oct. 1, and involved some 318 e-commerce merchants from the United States and Canada.

Survey respondents were asked, "Over the past 12 months, what single major U.S. or Canadian city presented the highest risk of online fraud ?" and "Which single country outside of the U.S. and Canada poses the highest risk of online fraud?"

In 2007, Miami led the list of U.S. cities, cited by 10% of respondents, up from 7% in 2006. New York City dropped to 8%, from 9% in 2006, and Los Angeles dropped to 3%, down from 6% in 2006. Chicago; Detroit; Atlanta; Washington, D.C.; and San Francisco were runners-up.

On a statewide level, online orders from New York are considered risky by 20% of respondents, compared with 12% who identified Florida and 6% who identified California in 2007. In 2006, New York was cited as risky by 23% of respondents, while Florida and California were recognized by 9% of survey takers that year.

In terms of offline larceny, as measured by the FBI's crime statistics, the theft rates in 2006 were highest in St. Louis; Corpus Christi, Texas; and Memphis, Tenn.

Among countries believed to be a likely source of online fraud, Nigeria was cited by 27% of respondents, more than three times the next most frequently identified country, the United Kingdom (8%). Ghana, Indonesia, and China ranked third, fourth, and fifth worldwide in 2007, with scores of 7%, 6%, and 5%, respectively.

In 2006, Russia held second place (9%) behind Nigeria (31%). Its absence this year, according to Doug Schwegman, director of customer and market intelligence at CyberSource, is the result of merchants simply giving up on shipping goods to Russia.

That particular approach to online fraud is, however, unlikely to scale well, at least for companies with an ongoing interest in e-commerce.

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