RealTime IT News

Study: Six Million Victimized By E-Commerce Fraud

Six million Internet users claim they have fallen victim to credit-card-related fraud, including unauthorized use, according to a national survey by The National Consumer League.

"This survey shows that Web era consumers are every bit as vulnerable as those who were around before the Internet changed the way that more and more of us do things," said Linda Golodner, president of the NCL.

The National Consumer League released the study's finding late Wednesday in its report, "Consumers in the 21st Century,". Pollsters Lou Harris and Associates, Inc. surveyed more than 1,000 adults during late April to early May.

"While the Web can empower consumers with information, it also leaves the unwary exposed to new variations on old fraud and abuse schemes. We now have a much better sense of how consumer groups can use new technologies to meet the evolving needs of Americans in the Information Age," Golodner said.

Although only 7 percent of online users reporting fraud is a relatively low number, Lou Harris said since that translates into 6 million users, is significant.

"The underlying number of 6 million Americans marks this as a major consumer issue for the new century," said David Krane, executive vice president, Lou Harris and Associates.

The National Fraud Information Center a group run by the NCL, is trying to combat cyberspace scams, arming consumers with tips, articles, and bulletins to avoid fraud, protect privacy, and navigate the Net safely.

According to the group's last published results, online auctions represented the top complaint for 1998, which soared a whopping 600 percent since 1997. Online auction complaints were also the number one complaint in 1997, but only equaled 26 percent of total frauds reported. In 1998 that number jumped to 68 percent.

"More people are online, and more people are getting scammed," said Susan Grant, Director of the Internet Fraud Watch. "Consumers need to remember that con artists are everywhere -- even in cyberspace."

"Requesting cash is a clear sign of fraud," said Grant. "Pay the safest way. If possible, pay by credit card because you can dispute the charges if there is a problem."

Interestingly enough, the best-known online auctioneer, eBay is a supporter of the watchdog group, listed as a donor contributing under $25,000. While wildly popular, eBay has been the target of numerous complaints involving scams. The group said it has been working with eBay in resolving auction-related deceptions.

Other findings in the report paint a more optimistic picture of the e-commerce landscape. Results show that three out of four Americans look favorably to future technology developments, believing that emerging technology will help make life more convenient. An optimistic 63 percent even believe that by the year 2020 wires will no longer be needed to operate PCs or phones.

Also on the horizon for the year 2020, 60 percent of Netizens feel that all banking will be conducted online. Of those surveyed, 49 percent think it is likely that consumers will be using cash or paper money, versus 47 percent who feel it is not likely. In addition, 76 percent report feeling secure in making bank transactions through ATMs or electronic fund transfers.

Shopping via the Web is also projected to grow, with three out of five or 57 percent of adults saying that by 2020 they will shop online more than they currently do. Right now most poll respondents, 42 percent, reported accessing the Internet to gain information about products and services, with 24 percent saying they go online to actually purchase goods and services.

Seventy-three percent of Americans are not comfortable giving their credit card information to online businesses, 73 percent didn't want to give out other and 70 percent hesitated at giving out personal information.

According to tips provided by the Internet Fraud Watch, Internet users are advised not to give out credit card numbers unless the site has the latest encryption protocols in place and the user know and trust the company. The group also warns that fraudulent sites may tell users that encryption is not necessary, but "don't believe it." If consumers are confused as to whether a site is truly encrypted they should ask for alternate payment methods.