An online scheme which aims to protect businesses from credit card fraud has saved members £2 million, as retailers attempt to deal with soaring numbers of internet criminals, new figures have revealed.

Early Warning, a system which helps online firms prevent ‘cardholder not present’ (CNP) fraud, allows members to check their own sales orders against a national black list of known fraudulent transactions.

The scheme, which also allows members to log illegal activity that they have discovered, has now saved companies an estimated £2 million in lost goods and profits since it was established in 2002.

However, the success of the Early Warning system does little to mask an alarming rise in CNP fraud over recent years, with losses suffered by businesses standing at £110 million in 2002, a 15 per cent increase on the previous year, and a massive £100 million rise on 1998’s level.

Early Warning said that although firms in Manchester, Coventry and Nottingham have suffered particularly badly in terms on fraudulently delivered goods over the past year, areas of Greater London dominate the ‘fraud Top 10’ of regions worst affected by online crime.

Despite improvements in online security over recent years, Early Warning claimed that CNP crime will continue to rise in the future, with fraudsters using ever more sophisticated techniques to outwit retailers and the police.

Early Warning grimly predicted that the much-lauded ‘chip and pin’ system, which requires cardholders to enter a security code before a transaction can be completed, could actually boost CNP fraud as con men will find it harder to swindle shops and will be forced to go online.

The anti-fraud company also claimed out that “under-resourced” police forces often do not investigate online crime, unless it is particularly serious.

Andrew Goodwill, managing director of Early Warning, said that he was pleased that the service had prevented £2 million of fraudulent transactions, but the figure was really just the top of the iceberg.

“Online retailers need to understand three simple facts –

  • Fraudulent CNP transactions are the full liability of the online retailer.
  • The credit card companies are doing very little to address the problems of CNP fraud.
  • The police are wholly under-resourced to investigate these crimes properly.

“The truth is that if online retailers don’t do something to protect themselves, then eventually they will be hit with a fraud, and that may, ultimately, put them out of business for good,” he warned.

To find out more about the Early Warning scheme, click on www.early-warning.org.uk