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Fraud Concerns No Match For eCommerce Growth

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Posted March 15, 2005 By Tim Gray     Feedback

VeriSign's stats say Internet Commerce increased 88 percent during recent holiday season.

The growing threat of phishing attacks and increased incidences of identify theft weren't enough to keep consumers from buying online this past holiday season as e-commerce rose 88 percent, according to VeriSign's latest Internet Security Intelligence Briefing.

The fifth annual report shows the online payment service company processed $12 billion in Web sales between Nov. 1 and Dec. 31, 2004, up from $6.4 billion in sales during the same period in 2003. The volume of online transactions increased 39 percent.

The survey, which monitors trends in Internet usage, commerce, fraud and security, points to an increase in consumer confidence, growing broadband access and the availability of inexpensive goods on the Internet as driving a dramatic rise in e-commerce spending.

"Consumers are less tolerant to get up early, get their coffee and make that push through the malls," Fraser Smith, VeriSign's product manager of payment services, said. "They don't need to do that because they are discovering that shopping online is less hassle and less stress."

Smith also said that a growing number of broadband users in rural communities, who generally have to travel greater distances to find wanted items, played a sizable role in the impressive increase.

"It's a lot easier and a lot cheaper to buy goods online instead of traveling hours to get it at the store," he said. It is a win-win."

Although e-commerce activity skyrocketed, online merchants reported a drop in the number of transactions they categorized as too risky to complete, down to 6 percent from 7 percent in 2003.

"Merchants are using filters that automatically recognize a familiar customer and automatically approve the sale," Smith said.

The biggest jump occurred in the gaming stores, which saw a rise of 96 percent in sales during the year time frame. Purchases at gift shops saw the second highest jump at 89 percent, while online donations to charities increased 79 percent, most likely due to the massive tsunami relief effort around the world, according to Smith.

While security continues to be a prime concern for both consumers and merchants, fraudulent transactions only accounted for 2 percent of all purchases, according to Smith.

The United States, Romania and Vietnam generated the highest volume of e-commerce fraud over the holidays. However, the majority of phishing attacks, 58 percent, occurred outside of the U.S. In the first half of 2004 the incidents were more frequent with 37 percent occurring with U.S. borders. The United States led in security threats such as worms, accounting for 79 percent.

This article originally appeared on InternetNews.com.

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