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BizReport : Ecommerce archives : November 28, 2006

Security Shake Up Needed to Increase Consumer Confidence in E-commerce

According to a new survey, security concerns are adversely affecting sales via e-commerce and email marketing.

by Helen Leggatt

The survey results, released Monday by research firm Gartner, suggest online retailers lost sales to the tune of nearly $2 billion in 2006. $1 billion of that figure is credited to those that refuse to shop online and the remaining $913 million was lost as online shoppers cut back on their total spend.

As a solution, Gartner´s Vice President and analyst, Avivah Litan suggests companies "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."

The rise in phishing attacks and viruses has also bred a distrust of emails that have come from unfamiliar sources. Survey results suggested 70 percent of users had had their behavior changed towards email by recent security incidents and, of those, 85 percent would delete messages without even opening them if they were suspicious of their origin.

“This figure has serious implications for banks and other companies that want to use the e-mail channel to communicate more cost-effectively with their customer base,” said Litan (via eWeek).

Gartner suggests that 33 million Americans do not use internet banking due to security worries.

However, offline transactions are still more likely to be open to abuse. "People are a little irrational about e-commerce. If you look at the data breaches, for example, four out of five card data breaches are at point-of-sale, not online," said Litan. "But people take out all the security problems on online. It's not irrational to worry about security, but it is lopsided toward online."

The web-based survey, which polled 5,000 U.S. adults, was published on November 27, 2006.

Tags: e-commerce, email marketing, gartner, online sales, online shopping, online spending, online transactions, security concerns

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