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Cyber Alert!

These simple tools can keep your business safe from payment fraud.

This story appears in the June 2005 issue of Entrepreneur. Subscribe »

E-Tailers beware: Internet fraud is alive and well in cyberspace. According to a November 2004 survey about online payment fraud conducted by CyberSource, a Mountain View, California, provider of electronic payment and fraud-prevention solutions, U.S. merchants expected to lose an estimated $2.6 billion to online fraud in 2004, $700 million more than in 2003.

Hardest hit, according to the survey, are midsize companies--those with annual online revenues between $500,000 and $5 million. This group said it expected to lose up to 2.5 percent of online sales to fraud, compared to 1.9 percent in 2003. The reason for this increase is twofold, according to Bruce Cundiff, an analyst at Jupitermedia Corp. "One is the increasing organization among the fraudster community that allows for more efficient fraud perpetration," he says. "In addition, larger businesses tend to be among the first to implement more stringent security measures. Fraudsters will always choose the path of least resistance." Smaller businesses without sufficient fraud protection mechanisms in place risk being exploited.

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