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17% Fall Victim to Fraud
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A The
survey, which queried 1000 U.S. adults via telephone, found that the most
prevalent kind of fraud resulted from a person’s credit card number
being used without permission, which is experienced by 5% of all
Americans. The study also revealed that two of the least frequent types of
fraud resulted from unauthorized use of a person’s Social Security or
driver’s license number, both of which were close to the 1% level. “Overall,
our survey found that the most significant form of fraud consumers
experience today is credit card related,” said Robert Skolnick,
Executive Vice President of BAIGlobal, Inc. Skolnick continued, “While
some identity fraud does indeed occur, it has not been a major personal
problem for the vast majority of Americans.” Comfort
Level While
many Americans assume that consumers are comfortable using credit cards,
the survey found that some are still uneasy. Skolnick stated, “We found
that regardless of whether someone had personally experienced fraud, their
comfort level with transmitting card information over the Internet was
quite low,” said Skolnick. Among
those with credit cards, only 15% were comfortable using their cards over
the Internet, compared to 31% feeling comfortable using their card over
the telephone and 81% being comfortable using their card in person.
However, once a consumer made a single online purchase with a credit card
their comfort level with Internet card use increased dramatically, as 47%
of those surveyed now feel comfortable, according to BAIGlobal’s study. Second
Study In
a second BAIGlobal study, focus groups explored different types of card
(credit, ATM, debit) and identity fraud issues, including the impact that
fear of fraud has on consumer online purchasing behavior. The focus groups
specifically uncovered three distinct factors driving consumer feelings
about fraud. First,
consumers revealed a straight-forward fear of credit card theft. Second,
consumers expressed specific concerns surrounding stolen identity
credentials and someone posing as “you” for fraudulent purposes.
Third, consumers felt an underlying sense of unease about the loss of
privacy now possible because of Internet technology. “Consumers’
level of concern for loss of privacy due to the Internet was
substantial,” said Skolnick. “Although databases containing personal
information have been around for years, the Internet was seen as making
data, such as financial, medical, and motor vehicle records, more readily
available, causing consumers to feel extremely vulnerable to possible
fraud.” Purchasers
vs. Browsers However,
the survey results don’t necessarily mean bad news for online merchants
or credit card processing. In fact, it seems that those less inclined to
purchase in the first place are the ones who are most wary of online
purchasing. For example, the study explored two types of Internet users: purchasers
who bought items online and browsers
who surfed but did not make purchases. “The distinguishing factor
between these two groups was how they perceived their vulnerability to
fraud and how they managed risk,” said Skolnick. “For purchasers,
the benefits of buying online—availability, convenience,
speed—outweighed their perceived level of risk of online fraud. Browsers,
on the other hand, perceived the Internet as a riskier place to do
business. They would only purchase something online if they felt the value
or convenience of the transaction was worth their perceived very high
vulnerability to fraud.” While
the survey results may be discouraging to online merchants and financial
service providers, they don’t have to be. In fact, they indicate that
fraud is low, it is just perceptions that are high. Therefore, increased
education and communication will entice online shoppers—which is a lot
easier than fighting fraud. According
to Skolnick, “Actual incidence of fraud may be low, but consumer
perceptions of risk are high. To convert browsers
into purchasers,
businesses need to manage both perception and reality. Managers need to
develop programs, such as better encryption software, fraud protection
guarantees, and anti-fraud tracking services, that truly protect consumers
from possible credit card and identity fraud online.” BAIGlobal,
Inc., is a worldwide full-service market research firm headquartered in
Tarrytown, N.Y. The firm is an independently operating subsidiary of
Market Facts, Inc., the 10th largest research firm in the U.S.
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