On-line Fraud Is Minimal Compared To Perceptions

Canadians are among the world leaders in worrying about on-line security, according to Online Security: E-Commerce’s Major Image Challenge, a report by research firm Angus Reid.

The report stated that in spite of having a high level of Internet penetration, fewer than four in 10 Canadians admit to having made a purchase on-line, compared to six in 10 American users.

The study also reported that exactly three-quarters of all Canadians report that on-line security, specifically the fraudulent use of personal credit cards, is a major or moderate concern. A mere one per cent of North Americans reported being the actual victim of on-line fraud, while six per cent know of someone else who has been a victim.

“At present, many consumers in Canada are behaving according to their fears,” the report stated. “Almost half (48 per cent) of all respondents told us that their fears about security have made them less likely to purchase on-line. This makes Canadians one of the most actively fearful populations in the world when it comes to on-line security.”

Fellow research firm Ipsos-Reid, based in San Francisco, recently released the results of a worldwide survey concerning on-line fraud. The survey studied 16 national markets including Japan, the United States, Canada, the United Kingdom and China, and although across the board the majority surveyed said they are very concerned with on-line fraud, only one per cent were found to be actual victims.

“Within the survey data that we have,…we found one of the perceived major risks (to be) people’s credit card information (being) lifted by some unknown party and used fraudulently,” said Julie Busch, a vice-president and technology analyst with Ipsos-Reid. “The old adage is really coming to light here. Perception is reality.”

Busch said that, fortunately, credit card companies and e-tailers have begun to take these facts seriously and are taking major steps to improve on-line security.

“There is so much missed opportunity in sales,” she said. “Obviously, credit card companies and on-line retailers benefit from increased sales over the Internet.”

Busch said that although most on-line retailers provide privacy policies to assure consumers of the security of their sites, these policies are typically made up of legalese and are often difficult to understand.

“When you see something in legalese you put your guard up,” she said. “One of the things credit cards and e-tailers can do is make (the policies) more consumer-friendly…to really build the relationship with consumers.”

Busch said that on-line businesses are also putting an effort into making major advancements in software, enabling stronger security from a technical standpoint.

However, according to John Smith, senior vice-president and CIO of Sears Canada Inc., on-line shopping makes up for approximately two per cent to three per cent of the company’s total business.

“Our Web site is still relatively small,” Smith said. “(But) it is our fastest-growing channel and we do expect it to do somewhere between $100 (million) and $200 million through this year.”

Smith said he understands consumer fears and added that Sears is making the protection of customer information a top priority.

“The size of our organization and the value of our brand name means that we are going to be able to make the investments that are required to provide adequate security,” he said. “A smaller organization does not necessarily have the resources for those kinds of investments.”

Smith added that Sears has taken every possible step to provide consumers with privacy and security of their credit card and personal information. He added that fellow e-tailers do have the ability to change consumer behaviour and calm their fears.

“Shopping is all about convenience whether you are shopping on-line or through any other channel,” he said. “It is going to take time and effort on the part of retailers to demonstrate the convenience of on-line shopping.”