Security Fears Were a Big Downer for 2006
According to the research firm Gartner, e-commerce lost almost $2 billion in 2006 thanks to security concerns that consumers feel when they shop online. About half of this figure ($913 million) was due to consumers who avoided sites that seemed to be lacking comfortable security measures, while the other half ($1 billion) was due to consumers who avoided online shopping altogether due to security worries.
This certainly puts a damper on the good news that e-commerce seems to be experiencing lately, especially in light of the recent buzz coming from Black Friday activity online.
Gartner analyst Avivah Litan said that more than 46% of the 155 million adults in the U.S. who use the Internet indicated that concerns about information theft, data breaches, and Web-based attacks have affected their online activity, including purchases, transactions, and e-mail conduct. E-commerce suffered the most out of all online activities in 2006.
Suspicious e-mails are getting the cold shoulder from many consumers, who are increasingly distrustful of messages in their inboxes that come from unfamiliar senders. According to Gartner, many of these consumers just delete these dubious e-mails without opening or reading them.
Litan said that banks and other companies who operate online are very concerned about this trend in e-mail suspicion, because of the economic benefits that are being lost due to consumers’ altered behavior when it comes to their e-mail messages. These companies have become more concerned about e-mail misgivings than with fraud.
Banks who offer online services are struggling the most, since their financial benefits from doing business online are hugely beneficial compared to handling in-person transactions.
There was an indication from a poll released earlier in November that consumer confidence online was on the rise. Litan contends against this finding, saying that the poll was done over the phone, which cannot offer helpful results in a study of online transactions.
Though consumers’ worries have remained at about the same level as 2005, Litan says that the financial implications are much more significant now, and that “last year, people were just worried. Now they’re changing their behavior.”
Litan also said that “Companies should implement back-end fraud detection, stronger user authentication [beyond single-factor passwords], transaction verification for high-risk transactions and data masking/truncation of sensitive data that is shown on Web-based screens.”
Consumers are probably over-reacting a bit to these concerns, which may not be such a bad thing. Litan indicated that four out of every five card data breaches were at point-of-sale and not online. So long as consumers keep their online dealings primarily to big and trusted names, and if they keep their eyes peeled for visible and legitimate indications of security measures taken by sites, they should fare well.
But it’s always better to be safe than sorry.
Sources:
http://www.informationweek.com/software/showArticle.
jhtml?articleID=196513328
http://www.webpronews.com/topnews/topnews/wpn-60-
20061127ECommerceToLose2BillionIn2006.html
