Phishing Erodes E-commerce

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Fear of phishing hits e-commerce

By John Leyden

Published Wednesday 5th May 2004 17:09 GMT

Concerns about falling victim to phishing scams are eroding US consumer confidence in online banking and e-commerce. A survey out yesterday points to fears about online fraud based on widespread misconceptions about the minimal impact of phishing in overall fraud losses.

Almost three in four online account holders (74 per cent) responding to an online survey by software developer Cyota said they were less likely to shop online because of phishing. Cyota's poll revealing that 75 per cent of account holders are less likely to respond to email from their banks, and over 65 per cent said they were less likely to sign up or continue to use their bank's online services as a result of fraud fears. Only 30 per cent of the 650 respondents to the survey expressed a high level of confidence that they could distinguish between a real email and a fraudulent one.

Cyota reckons improved education and consumer awareness programmes by banks can help to alleviate fears. Said Naftali Bennett, Cyota CEO: "The message is clear - email fraud is a threat to consumer trust in their bank and the Internet, it causes significant damages, and it is not going to go away - banks must take a pro-active role to fight phishing and secure their customers."

Phishing scams have cost British banks more than £1m over the last 18 months. This is a tiny fraction of the £402.4m lost through credit card fraud for last year, but banks are still keen to raise awareness of the issue. Banks in the UK have taken the loss for money siphoned off from UK accounts as a result of phishing. Comparable US figures aren't available but it is reasonable to suppose that phishing similarly occupies only a minor role in online fraud in the States. ®

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