E-Tailers Unconcerned by Fraud

Fraud is of very little concern to those in the e-commerce world, according to a survey conducted by ActivMedia.

In a survey for its report “Real Numbers Behind the Online Retail Industry,” 96 percent of the Web sites surveyed indicated that fraud is of little concern.

In general, ActivMedia found that among vendors with similar online and offline fraud exposure, online credit card charge back rates are lower than offline rates. Five in six Web merchants in the survey report that online fraud is not a problem (chargebacks average 1 percent of sales across all Web sites). Ten percent of the merchants report “minimal problems” with fraud.

Is Online Fraud a Problem
for Your Web Site?
Not a problem 85.0%
Occurs, but minimal impact 10.6%
Somewhat, deal with regularly 4.1%
Substantial 0.3%
Source: ActivMedia

Only 4 percent of the sites in the survey said they regularly experience fraud problems. Larger online businesses with higher revenues see more online fraud than average, the survey found. Fraud rates hover just under 2 percent at companies with more than $25,000 in revenues in 1998.

“Fear of placing electronic transactions has kept some would-be buyers off the Web, just as fear of fraud keeps some businesses from diving in with both feet,” said Harry Wolhandler, ActivMedia’s VP of Research. “But the reality is that Web-based transactions are, in many cases, safer than those that take place over the phone or even with brick-and-mortar retailers.”

While e-commerce has not suffered overall from online fraud, ActivMedia’s report notes that the scamming of individual shoppers make it necessary for federal authorities and law enforcement to keep up anti-fraud measures such as the Internet Fraud Complaint Center.

ActivMedia’s report is based on responses from randomly selected Web managers throughout the online population.

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