Study Reveals Surprising Perception of Online Fraud

Linc Wonham
by Linc Wonham 16 May, 2011

A new joint study from ThreatMetrix and the Ponemon Institute explores consumer sentiment surrounding the Web industry's ability to safeguard their personal information online.

Results across four industries showed that consumers are most confident in banks, followed by credit card and payment processors, and then social networks. Consumers believe that online businesses are the least reliable at protecting users' personal information.

"It's logical that consumers should have the most confidence in the banking industry's ability to protect their information online, as banks have a responsibility to protect their customers' funds," said Reed Taussig, president and CEO of fraud-prevention firm ThreatMetrix. "Social networks, however, surprisingly, have a higher consumer confidence ranking than online businesses in regards to protecting personal information. That represents a problem for the ecommerce industry, which relies on secure online transactions as the foundation of their business model."

The survey found that the perception of a company's ability to prevent fraud weighs heavily in a consumer's online decisions. Three in four consumers said they would not do business with an online merchant if they had doubts about the site's security measures. Eighty-eight percent said the same of banks or credit card and online payment processors, and 56 percent for social networks.

"Banks, online businesses, social networks and payment processors are all targets for fraudsters who phish their accounts for emails and passwords," said Taussig. "Yet when you bring ecommerce transactions into the picture, consumers are still very wary about the security of that data. Banks understand the importance of communicating these fraud prevention measures, which online businesses must also do. It's the first step to increase that level of confidence to the point where a consumer is willing to complete a transaction."

Eighty-five percent of the survey's respondents said online merchants, banks, social networks and payment processors should be more aggressive in preventing fraudsters from stealing consumers' information. Similarly, 80 percent believe that these industries should leverage technology to improve authentication of consumers.

Visit Consumers' Reaction to Online Fraud for the full results of the study.