Fear of Internet fraud causes consumers to order offline

[October 9th 2000]

Almost three in five Internet users express concern that their credit card number could be stolen when making purchases online. Additionally, almost a third are concerned about personal information being obtained from their credit card, according to a new survey sponsored by MerchantOnline

When asked which method they feel is most secure for credit card purchases, respondents overwhelmingly prefer the phone over the Internet by a three-to-one margin (61% vs. 20%), and prefer mail order over the Internet almost two-to--one (55% vs. 28%). The phone was also preferred by a significant margin over mail order (52% vs. 34%).

"When it comes to purchasing goods and services on the Internet, people are genuinely concerned about the security and privacy of their credit card and personal information," says Tarek Kirschen, CEO of MerchantOnline.

"Although the E-signature Law will open up a convenient new way for people to engage in legally binding transactions, the survey shows that many people need to be educated about the Law and the methods available to protect their personal and credit card information when making purchases and completing legal transactions online."

Other key survey findings:

• When people with Internet access were asked their reasons for not buying products or services online, more than a third (39%) indicated they were afraid of hidden costs, 32% were afraid the deal was fraudulent and 21% thought the company was unethical.

• A vast majority (84%) indicate they use credit cards to make purchases, including 68% who made a credit card purchase over the phone, 56% who made a credit card purchase by mail order and the fewest - 51% -- who made a credit card purchase online.

• One in five (22%) respondents has had their credit card information used fraudulently.

• When read a description of the new Electronic Signature Law, less than half - 43% - of respondents were familiar with it, while 55% were hearing about it for the first time.

• 68% indicate the new e-signature law will not impact their online buying habits, 20% say they are less likely to buy and 9% say they are more likely to buy.

• Only two in five people (40%) indicate they are comfortable with the idea that their digital signature is now legally binding, while 55% are uncomfortable.

• When asked about online security methods that would make them feel safer, 46% chose a hardware device that encrypts data and information before it enters a computer and 36% chose an encrypted certificate that permanently resides on the computer.

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