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E-crime ‘most costly UK retail crime’

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E-crime costs retailers more than any other retail crime, including shoplifting, according to a British Retail Consortium (BRC) study. But the majority of losses come not from the goods stolen or money defrauded, but from the legitimate transactions that are turned down as retailers look to avoid losing money, the study suggests.

In its Retail Crime Survey 2012, the BRC found the overall cost of retail crime rose by 15.6% last year to £1.6bn. Of that total cost, which covers the value of goods stolen, damage incurred as well as crime prevention measures for the future, some 37% came from e-crime, the study said. That makes it, said the study, “a more costly retail crime than shoplifting”.

Fraud accounted for 26% of the cost of retail crime, while customer theft accounted for 28%. Employee theft was behind 4% of the cost of retail crime, while burglaries accounted for 2.9%, criminal damage 1% and robberies for 0.7% of the cost.

The e-crime section of the report is based on a quantitative survey carried out by the BRC between April and May 2012. It suggested that e-crime cost the retail sector £205.4m in 2011 to 2012, including £77.3m in losses including identification-related fraud such as account takeovers (£20m), card-related fraud (£15m) and refund frauds (£1.2m). The retail sector spent at least £16.5m in security, including payments to banks for systems such as 3D Secure and chargebacks. But the biggest cost was the estimated lost revenue that came as legitimate orders were rejected through online fraud prevention measures. That cost was put at £111.6m in 2011-12.

The study also found that more than 20% of retailers reported disruption following distributed denial of service attacks, while phishing was also a serious issue. The study found respondents who said a single phishing attack could have cost the company up to £2m to tackle. It also seems that UK brands and companies are now the second most targeted in such phishing attacks, in which the aim is to steal personal data. That’s probably because the UK enjoys high levels of online sales. The study suggested that around 86% of phishing or hacking attacks originate from within the UK, although retailers may find it difficult to distinguish where the attacks come from.

Respondents to the study showed low levels of satisfaction with police responses to retail e-crime, while 60% of retailers questioned said they would be unlikely to report more than 10% of e-crimes to police. “The reason for such low levels of reporting and satisfaction,” said the study, “was that e-crime is not considered to be a priority by many police forces.” It added: “The need for a more effective law enforcement response to e-crime and fraud remains a priority concern for the BRC and its members.”

The most common retail crime was customer theft, accounting for 83% of all incidents, but, found the study, only 12% of those thefts were reported to police in 2012. That’s down from the 47% of thefts reported in 2011. It’s a trend that suggests, said Helen Dickinson, director general of the BRC, that retailers’ confidence in how the police will treat retail crimes is falling. “Retailers are spending more than ever on protecting their customers, staff and stock,” said Dickinson. “They deserve the support of law enforcers and politicians. Staff should have confidence to report crime and that action will be taken against those responsible for it.

“The appointment of PCCs presents a new opportunity to understand and tackle retail crime and its effects. It’s vital they put it high on their agendas.”

The Retail Crime Survey was completed by 44 UK retailers, who between them employ 1.4m staff, representing 58% of total retail turnover.

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