Online Security Concerns Have Chilling Effect on Consumers Even If Actual Fraud Rare

New Data Shows Internet Users Unconvinced by Existing Credit Card Security Measures But Only 1% say They're Victims of Online Fraud

Online Security Concerns Have Chilling Effect on Consumers Even If Actual Fraud Rare

SAN FRANCISCO, June 28, 2001 - The security of credit card information in online purchases is a major barrier to online purchasing among a significant number of people with internet access, thus limiting the real, greater potential for e-commerce growth, new research by international research firm Ipsos-Reid indicates.

Almost half of the 8,500 adults in 16 countries surveyed by Ipsos-Reid said the potential for online credit card fraud is a "major" concern (46%), while a quarter (26%) cited it as a "moderate" concern.

Not only are consumers concerned, the prospect of online credit card fraud also has a chilling effect on potential online shoppers. Among U.S. Internet users who have yet to make an online purchase, 55% claim the potential for fraudulent use of their credit card information makes them less likely to shop online. Another aspect of the problem is the fear that credit card holders are personally liable for all of the charges that an online thief might rack up. The degree of concern about this problem suggests something basic--consumers may be reacting to the threat to their personal privacy that is implicit in online fraud.

However, according to its latest The Face of the Web study of Internet usage around the world, Ipsos-Reid found that more than two-thirds of American Internet users have bought something online, making the U.S. by far the single biggest e-commerce market in the world. About 40% of Internet users in major developed countries have shopped online.

"E-commerce has gone mainstream in the U.S. and a handful of industrialized nations. But to some extent the easy money has been made. The fears about fraud and misuse of personal data persist and are keeping tens of millions of potential shoppers from making the leap from using the Internet to comparison shop to making an actual purchase online," said Julie Busch, a vice president and technology analyst with Ipsos-Reid.

"Other research we've done shows that online shoppers are generally satisfied with the online shopping process," Busch added. "But at the same time, online security and privacy are issues that refuse to go away, especially in key markets such as the U.S."

"With more than 100 million Americans online, half of whom spend over $500 a year on the Internet, there is huge opportunity among the other half who have yet to make an online purchase. It's now up to e-tailers and credit card companies to demystify e-commerce and turn these fence-sitters into satisfied Internet consumers... and make money."

In the U.S., 47% of respondents said online fraud was a "major concern" and another 23% said it was a "moderate concern." The most concerned about fraud are the French where 63% of consumers cited online fraud as a major concern.

FEW ACTUAL VICTIMS OF FRAUD

The study is part of the company's ongoing research of Internet usage habits around the world. When asked if they had been the victim of online credit card fraud or knew of someone who had, few could cite any first-or-second-hand experience. Just under 1% of all consumers say that they've experienced online fraud, the Ipsos-Reid study reports.

At least half of consumers in the United Kingdom (55%), Canada (54%), urban Brazil (51%), and Japan (50%) say the possibility of online credit card fraud is a major concern.

The data suggest that in order to remove barriers to online purchasing, e-tailers and online credit card companies need to:

  • Educate consumers about security measures used during the online purchase transaction process
  • Disclose corporate policies regarding the use of personal information in consumer-friendly language
  • Overemphasize the availability of consumer protection plans provided by credit card companies

"There is a lot to be said for the trust and relationships that local retailers deliver over time," said Busch. "There are real challenges and significant opportunity among e-tailers to deliver the same level of trust and personalization over the Internet."

About Ipsos-Reid Ipsos-Reid has been tracking public opinion around the world for more than 20 years and has become a leading provider of global public opinion and market research to private, public, and not-for-profit organizations in over 50 countries. It is a member of Paris-based Ipsos Group, ranked among the top ten research groups in the world.

The Global Express Research Methodology These international survey research data were collected via Ipsos-Reid's Global Express, a quarterly international omnibus survey. Fieldwork was conducted between February 9 and March 25, 2001. Data are based on individual surveys taken with a random sampling of adults (18+) across 16 national markets. The target sample size in each country was 500, except for the United States where 1,000 interviews were conducted. Within each country, the survey results can be said to be within 177 4.5 percentage points of what they would have been had the entire adult population been surveyed; 177 3.1 percentage points in the U.S. In 14 of these 16 surveyed countries, the samples provide full national coverage; in these countries the data were collected via randomized telephone interviewing, with the one exception of Poland where in-person door-to-door interviewing was used. Door-to-door interviewing was also used in the two non-national samples of Brazil and China where the sample coverage was limited to the largest cities (five cities in each case).

For further information on this survey, please contact: Julie Busch, (415) 274-8946 email: julie.busch@ipsos-reid.com.

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