Fear of Online Credit Card Fraud Shrinks Pool of Good Customers
Posted by Andre Edelbrock on Tue, Jun 08, 2010
 The U.S. Federal Trade Commission estimates that six times as much revenue is lost to "fear of fraud" as to actual fraud |
How making online shopping safer means a more profitable online environment for all
Beyond the total cost of fraud you may face today, there is an even bigger challenge: many potential customers are afraid to buy online. They don’t think it’s safe.
In fact, six times as much revenue is lost each year to fear of fraud than to actual fraud, according to the U.S. Federal Trade Commission.
That number is consistent with surveys and research by other organizations as well. VeriSign says half of Internet users avoid buying online, for fear of their financial information being stolen. And of those who have been victims of fraud:
- 12% don’t shop online any longer
- 25% shop less frequently
- 19% spend less when they do shop online
And according to figures from a CyberSource 2009 survey:
- 71% of consumers are concerned with the level of risk when shopping over the web, an increase of 5% over 2008
- 24% of consumers (the largest grouping of answers) say it is merchants’ responsibility to make online shopping safe
Making online shopping safer -- It's within your control
Trust seals can and do increase the perception of safe shopping for many. They, however, can only go so far, and with constant media attention paid to massive data security breaches such as those perpetrated against Heartland Payment Systems, TJ Maxx, Hannaford Supermarkets and many others, not to mention the myriad tales of unscrubbed and unprotected data on used hard drives, archival tapes full of social security numbers and other personally identifiable information falling off the back of trucks, consumers are rightly fearful that no matter what they or merchants do to protect their data, there are weak links in the security chain that put them at risk.
In fact, there are 3 elements to making Internet shopping not only as safe as it can be, but truly the safest form of shopping. First, merchants need to implement proper security precautions, especially PCI compliance. Second, compliance needs to be regulated and certified (and advertised by the accompanying trust marks). Finally, merchants need to ensure that in the event security is breached, that minimal harm comes to the consumer. The best way to do that is through collaboration with other merchants, as well as card issuers, fraud vendors, payment service providers - in fact, all the stakeholders in ecommerce.
The Global Fraud Alliance is that third and critical piece in making internet shopping safer. It provides a shield against misuse of breached and compromised data, by enabling merchants to gain insight into each other's payment experiences in real time, without compromising the privacy or security of their data.
Ethoca has recently made a very important contribution to safe shopping by making Ethoca360 Negative Signals freely available to any merchant that signs up for service during the introductory period. And, not just free to sign up, but free forever. Merchants need only apply and start actively using the service during the introductory period to ensure this lifetime benefit. This service is also being made available through partners such as 41st Parameter's FraudNet technology, GB Group's URU identity service, and the IMRG ISIS (Internet Shopping Is Safe) program. This network is rapidly growing to include other payment service providers and fraud merchants, and in the very near future will include many other in the U.S., Canada, U.K., and throughout Europe.
A safer online environment means a more profitable online environment
The more merchants collaborating against fraud, the safer the Internet will be, and the more customers will shop online.
Doing your part is simple, and most importantly, it will start saving you money right away, no matter what fraud tools or services you already use. That's because Ethoca360 Negative Signals is designed to be an additive service, compatible with all 3rd party offerings. This is simply smart business for members of the Global Fraud Alliance. Increasing the consumers willingness to shop online means more business for everyone.
We invite you to join.