Monday, January 15, 2001

87% of E-Crimes are Directly Related to Online Auction

According to the new ePrivacy & Security Report, 87% of online fraud committed in 2000 was attributed to online auction sites.

The ePrivacy & Security Report, released by eMarketer, also reveals that the greatest percentage of users falling victim to online fraud are surprisingly Generation X members and Baby Boomers, accounting for 50% of all cases, and not the young or aged.

The eMarketer Report provides a broad assessment of privacy and security, dealing with personal information piracy, credit card security, hacking into corporate networks, denial-of-service attacks and computer viruses.

"For most internet users, the protection of personal information is a real and valid concern," said Rob Janes, an Analyst at eMarketer. "Offerings of free services and promises of wealth lure participants into binding contracts or unbelievably great deals enticing consumers to buy products that never arrive or don't meet the quality promised."

As evidence of the sheer volume of auction activity being conducted online, eBay was recently placed 14th (outpacing online portals LookSmart and AskJeeves) in Media Matrix's global audience measurement analysis.

"Given that 16 million unique users may visit eBay in a given month, it's no surprise that auctions consistently rank as the most fraud-prone online activity," said Janes.

Key findings from the ePrivacy & Security Report:

· At year-end 2000, the FBI's Computer Emergency Response Team (CERT) registered a whopping 17,672 incidents of hacking - up from less than 10,000 in 1999.

· According to the two largest credit card companies in the world, VISA and MasterCard, the rate of credit card fraud as a percentage of all credit card transaction is miniscule. Their records show that in 1999, 22 million fraudulent credit card transactions occurred either online or offline of an estimated total of 25 billion transactions combined.

· Less than 66% of internet users have not been a victim of online fraud, while more than 34% has been victim of a privacy/security breach. Per victim, the price of fraud hovers around $600, which is more than most research estimates of average online retail spending.

· Children are, by far, the most willing to share personal information about themselves in exchange for goods and services and an issue of concern with most parents.
The majority of internet users who refuse to buy online are afraid of hidden costs, leery of fraud and question companies' ethics.

· The "Love Bug," ExploreZip," and "Melissa" viruses are the most widely spread and damaging viruses to date. At least half of the top-20 viruses originated from outside the US. So far, the "Love Bug" virus has caused the most financial loss, exceeding the "Melissa" virus by upwards of $4 billion.

Only 5% of World Population Regularly Use the Internet
According to an eGlobal Report, approximately 5% of the world's adult population 14 and over, 229.8 million people, are currently active internet users. The report indicates that as access to the internet improves throughout the world, the number of active users will rise to 640.2 million by 2004. Even then, only 14% of the world's adults will be actively using the internet. The report defines "active" internet users as people who spend at least one hour per week online.

The eGlobal Report, released by eMarketer, also reveals that various forecasts of total worldwide e-commerce revenues by year 2004, range from $963 billion (ActivMedia Research) to $4 trillion (Forrester Research). IDC Research projects $2.8 trillion and Goldman Sachs & Co. estimates $3.48 trillion.

"During the past year, the web's infrastructure, internet access technologies, and online content have increased substantially as the internet continues to evolve," said Nevin Cohen, Ph.D. and Senior Analyst at eMarketer. "The eGlobal Report provides data, from a wide variety of research sources, on the most significant changes to the global internet that will affect everyone from internet users to e-commerce merchants."

The eGlobal Report indicates that near-term (2001 to 2002) and future (2003 to 2005) growth of e-commerce will be driven by the B2B segment, not retail business-to-consumer (B2C) transactions. The B2B sector currently accounts for 79.2% of total e-commerce activity, but will grow to 87% of total e-commerce by 2004. By 2004, the report projects, worldwide B2B e-commerce will reach $2.776 trillion in revenues.

"Though it is less fun to write about automated supply chains than buying custom-fitted Levis online, the B2B sector is worth far more in revenue than retail online shopping," said Cohen.

Key findings from the eGlobal Report:

· The physical infrastructure of the web - measured in hosts, servers, webpages, and the devices connecting users to them - has expanded substantially.

· The cost of connecting to the internet is beginning to decline as countries privatize and deregulate their telecommunications sectors.

· Mobile telephone penetration rates have soared in both developed and developing countries.

· The popularity of wireless connections to the internet has altered the concept of surfing.

· The ubiquitous internet is finally becoming a reality as a wide range of internet access devices have proliferated.

· The days of US internet hegemony are numbered as the language and content of the internet is rapidly changing.

· Debates on how to narrow the digital divide took center stage this year.

· Although B2B e-commerce revenues have always exceeded B2C dollars, in 2000 e-commerce became vital for business success

· Despite the predicted popularity of digital money delivered through smart cards, old-fashioned credit cards and the even more traditional cash-on-delivery systems still dominate B2C and consumer-to-consumer (C2C) transactions.