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Consumers are willing to take additional security measures to prevent fraud: report

As ecommerce booms, consumers are getting wise to the possible perils of shopping online, with 78 percent of them willing to undertake auxiliary measures to ensure online security, according to a recent report from American Express.

The findings were the result of a survey held by American Express that polled over 1,000 consumers and over 400 merchants, and yielded a variety of metrics relevant to both groups in assessing the future of ecommerce security practices. The general import from the study is that consumers are becoming well versed in the perilousness of some corners of the ecommerce space, and a merchant’s due diligence will soon become addressing these concerns in a material fashion.

“Consumers are willing to take specific steps to safeguard their information when making purchases from a merchant online, according to our survey,” a spokesperson from American Express said.. “Consumers also cited several actions that they say are important for merchants to take to increase their sense of security, including providing easy-to-find customer service contact information on their websites, sharing regular updates regarding the status of orders they have placed, and providing visible security cues on their websites.

“Taking these steps may enable merchants to build trust with their customers and ultimately convert more people who visit their sites into purchasers.”

Fraud prevention
The survey’s methodology produced an analysis of consumer behavior which looked at how different groups considered the state of online fraud prevention and payment security.

According to the report, 48 percent of online consumers have experienced payment fraud within the last year; a staggering amount by any measure.

At the same time, 60 percent of merchants reported experiencing fraudulent online sales on their end, with even 25 percent claiming the level of online sales fraud they experienced increased this year.

The study also accounted for perceptions of the online shopping procedure and how safe consumers and merchants considered themselves from online fraud. 40 percent of consumers reported viewing online shopping as more risky than an in-store purchase.

42 percent of shoppers claimed that they had abandoned an online purchase due to payment security concerns, with the number increasing to 48 percent for Generation X and 50 percent for millennials— bucking any perceptions of unqualified, unconsidered technology adoption among younger generations.

“Overall, the survey showed that security is very important to consumers even as they are increasingly turning to digital channels to shop – and millennials are no exception,” the spokesperson said. “In fact, 34 percent of millennials are very confident in using digital payments.

“And since this group is considered tech-savvy and early adopters of new technology, they may be more aware of possible security risks as more activities move to the digital space.”

The number also squares with figures reported from the merchant side; 31 percent of their online sales transactions in were abandoned by customers before completion in the past year.

Security solutions
The report goes so far as to endorse different measures of online security and gathers information on the likelihood of their adoption. In addition to the aforementioned 78 percent of consumers who were willing to take auxiliary measures for online security (specifically CVV code entry in this case), 70 percent are willing to leverage security questions, 68 percent are willing to create one-time passwords and 63 percent are willing to open a customer profile on merchant Web sites to complete purchases.

When it comes to the corresponding figures on the other side of the transaction, merchants look to be woefully behind. Only 57 percent of merchants require CVV code entry for transactions, only 43 percent have security question prompts available, only 37 percent of merchants require a one-time password while only 46 percent make customer profiles available.

But the locus of blame for lagging fraud prevention does not lie merely on the merchant side. American Express found that only 44 percent of consumers use a different password for every online account, only 30 percent change their passwords once or twice a year and as many as 17 percent never change their banking or payment passwords.

All of these statistics en masse create an alarming picture of an ecommerce environment ripe for the taking. Both consumers and merchants have the opportunity to protect themselves more amply and raise the standard for online fraud prevention.

Online security consolidation is at the forefront of concern for the financial services industry. Earlier this month, U.S. Bank began to use mobile geolocation to address a commonly experienced inefficiency with the advent of online fraud protection: banks blocking non-fraudulent transactions due to assumptions about normal buying patterns (see story).

And fraud can be pervasive even after the completion of a transaction. Take Ticketmaster, which, along with the Dallas Cowboys, aggressively pushed for mobile ticket adoption to fight against fraudulent use of PDF tickets (see story).

“Our survey shows that consumers are increasingly making purchases across digital channels,” the spokesperson said. “While digital commerce will continue to grow, payment security is a top concern for consumers.

“This means merchants can take steps to ensure they not only are providing a smooth commerce experience for their customers but also a secure experience, whether it be online or mobile,” they said. “With so many shoppers reporting that they have abandoned an online purchase due to payment security concerns, merchants who increase their online security measures may see an impact on the number of consumers who complete a sale.

“American Express takes a multilayered approach to fighting fraud for our merchants and Card Members, and our investments in technology and advanced analytics have also enabled us to achieve the lowest fraud rates in the industry.”