Nearly a third of web shoppers were victims of online fraud last year.
While online shopping is booming in China, so are online scams.
In the past year, 31.8% of Chinese consumers who made purchases on the web—or roughly 63 million out of China’s 194 million online shoppers—were victims of online fraud, according to a report released this month by the China Electronic Commerce Association, a government-supported Industry association. The total amount lost to fraud was at least 30.8 billion yuan, or US$4.8 billion.
The report says about 70% of those defrauded typically spent between $80 and $317 on their orders.
An alliance of Chinese government agencies and industry associations in 2008 launched a program called Trust Start to certify e-commerce sites as legitimate. Some 6,000 Chinese e-commerce sites now participate. There are 24,620 business-to-consumer and consumer-to-consumer web sites in China, according to the China e-Business Research Center.
Scammers have many more consumers to target each year in China, as the number of Internet users in the country increased 55.8 million last year to 513 million individuals, according to the report from the China Electronic Commerce Association. The number of web shoppers increased 33.44 million to 194 million, the report says. The report also notes that 356 million Chinese consumers now access the web via mobile devices.
Business-to-consumer online sales to Chinese consumers increased 53.7% in 2011 to $124.22 billion, China’s Ministry of Commerce reported in June. That makes China easily the second-leading e-retail in the market after the U.S., where online sales in 2011 totaled $194 billion, according to the U.S. Department of Commerce. By comparison, the United Kingdom led Europe in 2011 online retail sales at $76.9 billion, according to the UK’s Centre for Retail Research.
Online fraud is hardly unheard of in North America. The Consumer Sentinel Network, an amalgam of government consumer protection and law enforcement agencies in the U.S. and Canada, says 5% of 1.8 million fraud complaints received in 2011 were attributed to Shop-at-Home and Catalog Sales, which includes fraud committed by online retailers. There were 98,306 such complains in 2011. Another 81,805 complains, nearly 5% of the total, were attributed to Internet Services.
Reported fraud losses totaled $1.52 billion, with an average loss of $2,267 and a median loss of $537, according to the 2011 Consumer Sentinel Network report published by the U.S. Federal Trade Commission.