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Early Warning Saves UK Online Retailers

£2 million and Identifies Fraud Hotspots


Early Warning, the online scheme that helps UK retailers to prevent CNP

(cardholder not present) fraud, has today announced that its member

companies have now saved a total of £2 million. Early Warning manages an

online database of known CNP fraud attempts and allows members of the scheme

to check their own CNP sales orders against this black list. Members can

also add fraudulent transactions that they discover to the database.


Commenting on the scheme's success to date, Managing Director Andrew

Goodwill said,


"We are enormously pleased to have prevented over £2 million of fraudulent

transactions going through our member companies, but this is really just the

tip of the iceberg. Online retailers need to understand three simple facts;


1. Fraudulent CNP (cardholder not present) transactions are the full

liability of the online retailer

2. The credit card companies are doing very little to address the problems

of CNP fraud

3. 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."


The Early Warning fraud database now runs to several thousand entries, with

members of the scheme contributing hundreds more each month. An analysis of

the last 12 months reveals that Manchester, Coventry, Nottingham and

Paisley (in Scotland) all feature in the Top 10 Hotspots for fraudulently

delivered goods. However, not surprisingly, Greater London still represents

the single largest problem, with 6 London areas filling the other places in

the Top 10 list. By far the worst area, and Number 1 in our list is

postcodes starting with SE (South East London).


Early Warning Members are equally pleased with the data-sharing scheme;


"With the TOTAL apathy on the part of the police to investigate relatively

small fraud attempts, it's fantastic that Early Warning provides a pooled

resource where companies of all sizes can go and compare notes on fraud or

attempted fraud. The credit card companies and the payment clearing houses

actually MAKE money out of fraud (by charging the merchant if a fraudulent

transaction takes place - talk about adding insult to injury!), so they have

no interest in preventing fraud either. So where do merchants turn? Thank

God for Early Warning!"

Tiël Holdstock, Storage Depot Ltd


"I stumbled upon early-warning.org.uk when I was searching the internet for

information about a customer who I thought didn't sound genuine. I'm glad I

did. Even though a complete record wasn't showing in the system at the

time, it did have the postcode on file. I decided not to process the order

and I'm glad I did. Another search later that week indicated that more

records on this person and address had been added to the database, thanks to

early-warning.org.uk we saved ourselves a £31,500 chargeback on that one

order alone. A valuable tool in the prevention of fraud."

Ben Field, Fotofirstdirect.com


Tip of the Iceberg


CNP fraud has been growing rapidly over the past five years, with losses on

UK-issued cards reaching £110.1 million in 2002, a 15% increase over 2001.


Despite recent attempts by the card issuers to establish more secure

verification systems, the growth of CNP fraud is set to continue over the

next few years. Fraudsters are employing ever more sophisticated techniques

to catch out unsuspecting online retailers and the police are so

under-resourced that only the most serious of offences are usually

investigated. Even the much-hailed "chip and pin" system currently being

rolled out throughout the UK is likely to lead to increased CNP fraud, as

criminals find it harder to perpetrate their crimes in high street shops

and turn to online retailers instead.


Retailers need an Early Warning


Established in September 2002, the Early Warning website was established by

MD Andrew Goodwill as a direct response to the growing threat of CNP

credit-card fraud. The web-based scheme, which can be found at

www.early-warning.org.uk, is designed as a repository for bogus or

fraudulent credit card orders. Members of the scheme can check their own

online credit card orders against a database of known frauds, as well as

contributing information on frauds that they have discovered themselves.

Email alerts for all new frauds are also sent to those members requesting

them.


In the 16 months since its inception, Early Warning UK has saved its members

from over £2 million of fraudulent transactions. The company now has

several hundred active members who have contributed thousands of known

frauds to the database. Many of these members are well-known high street

names, along with a cross-section of smaller companies and organizations.


Retailers who wish to join the Early Warning scheme must undergo an

authorization process to verify their suitability for acceptance. The

current pricing options are then available to them;


* Pay-as-you-go - £0.43 (plus VAT) per fraud search

* Basic web-based access - £59 (plus VAT) annual subscription

* Checker-based access (windows utility software) - £69.99 (plus VAT) annual

subscription


In addition, Early Warning is currently developing a "batch file" technique

that will allow a larger number of records to be checked against the

database simultaneously.


Delivery Hotspots


Of course with any online or CNP order the one tangible piece of information

to hand is the delivery address. An analysis of our database has led us to

identify certain hotspots throughout the UK.


Clearly Greater London represents the lion's share of the fraud delivery

hotspots, with South East London representing the single largest problem

area. The exact top 10 in order are;


1. London - SE

2. London - N

3. London - E

4. London - TW

5. London - NW

6. London - NE

7. Paisley - PA

8. Manchester - M

9. Coventry - CV

10. Nottingham - NG


Early Warning is currently seeing a significant growth for fraudulent

deliveries in the Twickenham area of Greater London, and this may be as a

result of a criminal gang operating in that area, rather than a large number

of individual fraudsters.



* Ends *


Further information can be obtained by calling Stephen Warren @ The

Marketing Exchange on 01903 203205, or by emailing

steve@marketingexchange.co.uk



Notes to Editors


For the past couple of years Andrew Goodwill, Managing Director of Early

Warning Ltd, has owned and run a small computer parts business that takes

credit card orders via the Web. During this time Andrew became increasingly

dismayed at the volume of fraudulent orders he received, as well as the lack

of any real system to help him identify the fraudsters. In September of

2002, Andrew's response to the problem, was to launch the Early Warning

website.


Early Warning UK Ltd now manages and administers the online repository of

known CNP frauds and makes this data available to other authorized

retailers. Early Warning develops and markets products that allow access to

this data-sharing facility. In addition, Early Warning UK is also involved

with bespoke development projects in the area of fraud prevention.


Some Other Member Comments


"Early Warning has given us piece of mind in the fight against fraud. We

use The Early Warning Scheme as well as multiple tools including additional

address checks to guarantee if an order is either genuine or fraudulent.

The more tools we have to fight against fraud the better our chances are of

reducing losses and being intimidated by this cowardly crime. Businesses

and organizations large and small can overcome and combat fraud by grouping

together, and looking out for each other. The Early-Warning Scheme allows

retailers to work as a group, fighting fraud on a scale never seen before.

We cannot rely on the Police to combat this problem; the only answer is

prevention."


Paul Roberts, thecoolingshop.com


"Before I joined Early Warning I lost over £20,000 in fraudulent

transactions over a 12 month period and my business very nearly folded.

Through changing our processing procedures and using your site for almost a

year our chargebacks have been zero. What more can I say?"

Ray Betts, puterz.co.uk



Early Warning (UK) Ltd, Bognor Regis, West Sussex,

Tel : +44 (0) 870 874 4999




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