March 24, 2009, 12:00 AM

Worries over fraud cost e-retailers $21 billion in 2008, study says

With 12% of online fraud victims saying they no longer shop the web, overall consumer concerns about Internet fraud potentially cost online retailers $21 billion in lost sales last year, Javelin Strategy & Research says in a new report.

 

With 12% of online fraud victims saying they no longer shop the web, overall consumer concerns about Internet fraud potentially cost online retailers $21 billion in lost sales last year, Javelin Strategy & Research says in a new report.

Drawing on a survey of 1,000 online consumers aged 18 to 34, Javelin estimates that online retailers lost out on $21.1 billion in spending by consumers who had either eliminated or cut back on their online spending because of identity theft or general concerns about online fraud.

The study adds that, while most consumers are not deterred from online shopping because of identify theft, 25% say I.D. theft results in them making fewer online purchases and nearly 20% say it leads them to spend less online. 60% of online consumers say they would blame an online merchant in the event of identify theft that occurred as a result of online shopping.

In addition, the study found that 39% of online consumers believe that online retailers will sell their personal information and that 50% believe they will receive junk e-mail as a result of shopping online.

"Online retailers are leaving business on the table by not communicating their security and customer service policies clearly to consumers, which is something that no business can afford to do in today`s economy," says James Van Dyke, president and founder of Javelin Strategy & Research. "To recapture these missed revenue opportunities, merchants need to reassure consumers that their information is being processed securely and that they have recourse should they become the victim of identity theft.”

The study, which was co-sponsored by payments processors eBillme and First Data Corp., also found that only 45% of respondents said they have always been satisfied with the quality and timely arrival of online orders.

 

 

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