SOURCE: eMarketer

June 07, 2007 16:44 ET

Consumers' Fear Increases Cost of Online Security

Number of Online Victims Declines, but Distrust Grows

NEW YORK, NY--(Marketwire - June 7, 2007) - Consumers' inflated fear of fraud adds millions to the cost of online crime. While the dollar damages are still significant, the number of victims has steadily declined. Yet consumers' behavior online doesn't reflect that decline. US Internet users are adjusting their behavior by visiting fewer sites, avoiding online banking and spending less money online, according to eMarketer's report "Online Security: Counting the Cost of Fear."

Identity protection is cited as the No. 1 security concern among Americans, more important than terrorism, according to a survey conducted by the Opinion Research Corp. But, data from Javelin Strategy & Research shows the number of victims of identity theft in the US has gradually declined since 2003.

"Internet security is a classic example where there is an enormous amount of fear-mongering and hype that is way out of proportion to the reality of the situation," says Ben Macklin, senior analyst and author of the report. "The Internet is not without threats, but available data show that rates of Internet fraud, e-mail viruses and identity theft have remained flat or have actually fallen over the last few years."

In another example, nearly half of US adults surveyed by Gartner Inc. said concerns about theft of information, data breaches or Internet-based attacks have affected their purchasing, online transaction or e-mail behavior. Gartner estimates that $2 billion in e-commerce sales were lost due to shoppers' security concerns in 2006.

The actual economic damage nationwide from viruses, spyware and phishing is $8.43 billion dollars, according to Consumer Reports. "Still, the fact remains that the majority of information security issues relates to offline activities," Mr. Macklin says. "Internet users have a reasonable expectation that governments and businesses will adequately protect them."

Marketers, he points out, must be vigilant in protecting their customers' security. But they must also work hard to engender confidence in the safety of their Web sites. "Fostering an environment of trust is fundamental if e-commerce, and the Internet sector as a whole, is to grow and prosper," Mr. Macklin cautions.

In the report:

--  What is the extent of identity theft in the US?
--  How are Internet users adjusting their behavior to security threats?
--  How are cyber criminals using social networks to target users?
About eMarketer

eMarketer is "The First Place to Look" for market research information related to the Internet, e-business, online marketing and emerging technologies. eMarketer aggregates and analyzes e-business research from over 2,800 sources, and brings it together in analyst reports, daily research articles and the "eStat Database" -- the most comprehensive database of e-business and online marketing statistics in the world. Visit for more information.

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