When free email addresses became available a few years ago they quickly became popular with travellers who could pick up their email from any Internet caf' and the rest of us who wanted to avoid our main email address from becoming clogged with spam.

But like every other useful facility it wasn't long before the criminally minded realised there usefulness as a way to hide. According to the credit reference agency CheckMyFile, retailers who accept transactions from the free web based email services are up to seven times more likely to find themselves having to make refunds as a result of fraudulent activity.

What happens is that an identity thief can use a stolen credit card to make a purchase via a free web based email address. When the credit card holder receives the statement and sees a transaction that is not recognised, the credit card company will cancel the charge and reclaim it back from the merchant. Of course, this happens long after goods have been delivered.

CheckMyFile claim that ecommerce companies are seeing an increase in fraudulent activity especially by customers who use Yahoo, Hotmail and similar virtual email services. The company goes further and claims that fraudsters use yahoo.co.uk email addresses in seven out of 10 cases of identity theft, with yahoo.com and hotmail.co.uk addresses also ranking high on the list.

In fact, CheckMyFile concludes that merchants should seriously consider not accepting orders from customers using Yahoo and Hotmail email addresses.