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Online Fraud Prevention in China

Ecommerce fraud and online fraud prevention in China

Read below about payment fraud, online fraud and fraud prevention China

In China, the boom in ecommerce and rapid mobile growth brings an increasing threat of online and mobile fraud. Sophisticated fraud prevention measures will play an important part in countering fraudsters and protecting genuine consumers.

China is a huge and growing market and card fraud, to date, has not been a major problem in relation to the value of transactions. Nevertheless, Timetric reports the value of card fraud in China increased at a staggering CAGR of 36.3% to USD 173.3 million in 2012. In the same year, Beijing prosecutors called on banks to review credit card applications more carefully and credit card fraud accounted for 88% of financial crime cases heard in Shanghai courts. The majority of these cases involved malicious overdrafts, credit card and ID theft.
From a fraud perspective, the major concerns in China relate to data security. Other concerns include people illegally accessing cash via bogus credit card transactions (with the connivance of some retailers) and application fraud, with insufficient attention being paid to verification procedures. In comparison with other countries, phishing attacks are not yet a significant problem.
China’s ecommerce market is booming, with ecommerce sales of USD 296 billion in 2013 according to the China Ministry of Commerce. It is expected that 350 million people will use the internet to purchase goods by 2015. Brands can access markets, especially smaller cities, where they have not had a physical presence and there are a growing number of specialist online shopping websites, with the most common purchases being clothing, daily necessities, computers and digital electronics.
Cross-border transactions are growing in popularity - according to McKinsey Global Institute research, Chinese consumers will buy 20% of all global luxury goods sold in 2015. Merchants have accessed the Chinese market and established brand presence by selling goods on popular platforms such as Tmall, (also known as,,,, and The sale of counterfeit luxury goods is a concern - in December 2013, China Daily reported that “New York-based design brand Coach Inc. has renewed its Memorandum of Understanding (MOU) with China's largest ecommerce company, Alibaba Group Holding Ltd, to take further steps against counterfeiting on Alibaba's ecommerce website Taobao”.
As ecommerce and mobile commerce continue to grow at a rapid rate, so the need increases for sophisticated fraud detection techniques. Though card issuers are required to adopt Verified by Visa, MasterCard SecureCode or JCB J/Secure, it is not mandatory for cardholders when making a card not present transaction. Other fraud prevention techniques, including fraud rules tailored to ecommerce and mobile commerce sales channels, will be critical for online merchants seeking to take advantage of the growing Chinese market.