The study from the 3rd Man shows that, in the year to August 2009, UK shoppers spent around £46 billion on cardholder not present transactions.
Around £0.5bn worth of this spending was carried by criminals using other people's payment credentials without authorisation - i.e. card fraud.
"Although Britain has been in a serious recession, it appears that many consumers have been happy to spend their money over the internet, which is good news", said Andrew Goodwill, a fraud specialist with the 3rd Man.
"However, fraudsters show no signs of giving up. They know that online shopping has become big business and they try every scam imaginable to dupe retailers. More and more honest people are using their cards to buy over the internet, but unfortunately more and more fraudsters are also upping their game."
"However, it's not all bad news", he added.
"In fact, using your card online or by mail order has never been safer. When your card is used by a fraudster, it is unlikely your details have been obtained as a result of an internet transaction."
"Furthermore, as so many retailers have better fraud detection and prevention systems in place, and they are working very closely together to deter the unwanted custom of single criminals and organised gangs", he added.
Delving into the card fraud research reveals that London tops the league of fraudulent card transactions with South East London, and particularly Woolwich, Plumstead (SE18) and Thamesmead (SE28), gaining notoriety as the places with the most fraudulent concentration of `bad' card activity in the UK.
Based on an analysis of over 85 million `good' and `bad' card transactions over the 12 months to the start of August, 2009, in these South East London postcode districts alone, there were more than one million transactions overall, 66 000 of which were deemed fraudulent at a value of more than £18m pounds.
Outside of the capital, other fraud hotspots - defined as having the most bad transactions in terms of their value in pounds - in the top 10 places include Manchester (4th) Nottingham (3rd), Romford (6th) in Essex, Coventry (8th) Birmingham (9th). Erith Marshes (10th), North and South West London occupy the other places.
As a percentage of good versus bad transactions, Ilford in Essex also makes it into the top ten as over 7000 bad transactions amount to more than £2m pounds in fraud.
Similarly, London EC makes it into the top 10 in this category with high levels of fraud versus bad versus good transactions (more than three percent). Enfield also makes an appearance with more than one percent of all transactions fraudulent.
The least fraudulent places in the UK are Lerwick in the Shetland Islands (14 bad transactions), Kirkwall in Scotland (34 bad transactions) and Taunton in Somerset (79 bad transactions).