Online shoppers report fraud and credit-card woes

Internet auctions are biggest source of complaints to league


May 20, 1999|By BLOOMBERG NEWS

WASHINGTON -- Nearly one-third of U.S. consumers who have bought products on the Internet say they have experienced online fraud or misuse of credit-card information, according to a survey conducted for the National Consumers League.

Just 24 percent of consumers who go online actually make purchases, the Louis Harris & Associates Inc. poll showed.

About 7 percent -- the equivalent of 6 million people, based on an estimated 85 million U.S. Internet users -- have had credit-card trouble.

Online auctions are the largest source of consumer complaints to the consumers league's online fraud Web site, said league President Linda Golodner, and they usually involve sellers who accept bids for things they do not own or they misrepresent the products.

U.S. officials, who estimate that online retail spending could reach $30 billion by next year, have warned that security and privacy issues could stifle electronic commerce.

"This is a big yellow caution flag for consumers," Golodner said. "While the Web can empower consumers with information, it also leaves the unwary exposed to new variations of old fraud and abuse schemes."

While 76 percent of those surveyed said technology will make life easier and more convenient in the future, 73 percent said they were worried about providing credit-card and other financial information to businesses online.

Visa USA Inc. and MasterCard International Inc., the world's largest credit-card brands, are using education campaigns and other efforts to fight credit-card fraud online.

MasterCard, the second biggest credit-card brand, has developed technology that electronically verifies the identity of merchants and consumers, said spokesman Edward Dixon. That will cut down on fraud from stolen credit cards being used online, he said.

"People who are willing to shop online understand they have to be careful about where they shop, just as in the physical world," Dixon said.

The Harris poll also found that traditional forms of shopping are not likely to disappear. A majority of adults surveyed said malls and local stores will be used about as much in the future as they are now.

About 42 percent use the Web only to get information about products and services, the survey said.

"The Internet's an exciting place, but there's still a degree of skepticism," said David Krane, a Louis Harris spokesman.

Those surveyed were split on whether the United States will still be using paper money in 2020, though 76 percent said they like the idea of conducting banking electronically through automated teller machines or electronic fund transfers.

Two-thirds of U.S. adults believe that all banking will be done online by 2020, the Harris poll found.

This week, Bank One Corp., the biggest issuer of credit cards online, introduced an expanded Internet site as the fifth-largest U.S. bank looks to gain customers online. The new site, at, lets customers invest, file taxes, apply for loans and credit cards and pay bills online.

Consumers want to make their lives easier, Golodner said. About two-thirds said wires into homes would not be needed for computers and phones by 2020.

Pub Date: 5/20/99

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