June 24, 2005, 12:00 AM

33% of online shoppers buying less due to fear of fraud, Gartner says

33% of online shoppers are buying fewer items due to concerns about online fraud, and 75% are more cautious about where they shop online, Gartner says in a new study.

Kurt Peters

Executive Editor

33% of online shoppers are buying fewer items due to concerns about online fraud, and 75% are more cautious about where they shop online, Gartner Inc. says in a new study.

The study, based on a survey of 5,000 U.S. adults, also found that concerns about online fraud are lowering consumer confidence in e-mail as a means of communication with businesses. 80% of online consumers said their concerns about online fraud have lowered their trust in e-mail from companies or individuals they don’t personally know. Of that group of consumers, more than 85% delete suspect e-mail before opening it, Gartner said.

"Companies need to take steps quickly to beef up online security," said Avivah Litan, vice president and research director at Gartner and author of the study. "We are seeing unprecedented levels in consumer transactions online. Yet businesses cannot rely on the Internet to lower costs and improve marketing efforts indefinitely if consumer trust continues to decline."

Gartner attributes much of the concerns about online fraud to the ongoing rise of e-mail phishing attacks, through which criminals use legitimate brands to trick consumers into providing personal information like credit card account numbers and passwords. In the 12 months ended in May 2005, about 73 million consumers received e-mail phishing attacks, up 28% from 57 million during the 12-month period ended in April 2004, Gartner said.

Gartner also noted that 2.4 million consumers have reported losing money directly due to phishing attacks; of those consumers, half of them lost a combined $929 million in the 12 months preceding the survey.

Phishing attacks, however, are not consumers’ biggest worry regarding online security, Gartner said. It noted that nearly twice as many consumers said they worry more about thieves stealing private credit reports and other sensitive financial data.

Another study released earlier this month by the Cyber Security Industry Alliance found that 48% of consumers are avoiding shopping online due to fears that that criminals might steal their personal financial information.

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