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Sales Lost in E-commerce Due to Security Anxiety

Consumers' nervousness about security during shopping online has resulted in loss in sales of US $2 billion this year. This is as per research firm, Gartner that released the results on November 27, 2006. The company also found that fear of fraud and identity theft kept away 33 million U.S. adults from banking online. Losses of about $913 million was due to people avoiding sites that they felt were less secure and $1 billion was due to consumers' fear to do e-commerce business at all.

According to Avivah Litan, analyst at Gartner, among 155 million U.S. adults who surf the Net, over 46 percent said that negative campaigning of information theft, data breaches, or Web-based attacks affect their online purchases. Out of the entire online consumer behaviors, e-commerce comprising of online banking, online payments, online shopping have been worst affected in 2006.

Gartner recommends enterprises to employ a double strategy - one to improve consumer confidence, and another to bring down fraud and keep criminals out. Litan says that these two objectives cannot necessarily be tackled with the same technical approach. Consumers and criminals are often oblivious of the most 'effective fraud prevention' applications.

Litan suggests that a 'layered approach' could most effectively solve the security problems. Companies could employ 'back-end fraud detection', followed by rigid 'user authentication', with verification of transactions that are prone to 'high risk' and 'data truncation' of sensitive information.

The research firm accounts that 33 million Americans stay away from banking online due to security concerns. 9 million consumers who once conducted online banking have stopped now also due to fear of insufficient security.

The rapid change in consumer attitude towards e-mail is most conspicuous. For reasons of 'phishing' attacks and delivery of malware, consumers have developed serious distrust on e-mails. Of every 10 people, about 7 admitted a change in attitude resulting from frail security and their trust in e-mails from unknown companies and people has been hampered. 85 percent simply erase e-mails they suspect even without opening them.
"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," says Litan.

This has serious inference for on those banks and firms that want to communicate with their customers through cost-effective e-mailing.

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