E-crime is the biggest emerging threat to the retail sector as the rapid growth in e-commerce in the UK sees new ways of shopping being accompanied by new types of crime.
The British Retail Consortium’s (BRC) first e-crime study is the first comprehensive survey assessing the make-up and scale of e-crime. It estimates the total cost to retailers in 2011-12 was at least £205.4 million. That includes £77.3 million in losses from frauds themselves as well as prevention costs and legitimate business lost as a result of those measures.
In proportion to the total value of sales, e-crime is twice as costly as overall retail crime.
At £205.4 million, e-crime represents 0.75 per cent of the £28 billion of online retail sales in 2011. The £1.4 billion cost of retail crime as a whole is 0.36 per cent of the £303 billion value of all retail sales.
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 e-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.
Retailers also lost £111.6 million to e-crime as a result of genuine business being rejected because of crime-prevention measures. For example, honest customers may be deterred from continuing with an online purchase by additional online security measures.
With the UK a world leader on online retailing - the UK has the biggest internet spend per-capita of any nation and 11 per cent of global internet retail sales - Government and law enforcers need to take e -crime more seriously if the sector is to maximise its contribution to economic growth.
But 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.
The BRC is calling for consistency on reporting, recording and investigating e-crime across the country and more police resourcing to be directed to e-crime.
British Retail Consortium Director General Stephen Robertson, said: “The rapid growth of e-commerce in the UK shows it offers great benefits for customers but also new opportunities for criminals.
“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.
“This first comprehensive survey assessing the make-up and scale of e-crime shows where efforts need to be directed.
“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."