To skeptics, fraud dangers lurk around every corner in the online shopping world.

Regardless of whether such fears are justified, consumers generally accept the notion that online shopping is risky business. Even more telling, most consumers have little trust in the security of their smartphones or mobile tablets as an online shopping tool, new survey data suggest.

But fraud-prevention systems that delay legitimate transactions or force consumers to regularly take numerous steps to input card data, even if the issuer previously approved the card, apparently fuel the perceptions that create mistrust, according to the survey of 1,000 adult online shoppers conducted in December.

Accertify Inc., an American Express company, commissioned the research. Its goal was to provide information to merchants regarding where consumers’ perceptions are created and whether going too far with fraud-prevention measures is affecting their business.

Nearly two-thirds of the respondents, or 63%, believed more fraud occurs online than with transactions conducted in person, while 81% felt their computers were more trustworthy than their smartphones or mobile tablets, the Chicago-based fraud-prevention and risk-management provider revealed Jan. 26.

Perhaps most telling to merchants, 28% of respondents said they encountered a fraud-protection system that unnecessarily delayed or denied their transactions. Of those, 35% said they penalized the merchant for the delay by taking their business elsewhere, Jeff Liesendahl, Accertify senior vice president, tells PaymentsSource.

“We generally thought consumers would feel these mobile devices were riskier, but the magnitude of their mistrust was somewhat surprising,” Liesendahl says.

Though a person adapting to new technology may be the cause for part of the mistrust, consumers generally have a “love-hate relationship” with security measures, Liesendahl contends. “They want security, but a little bit is good; too much is intrusive,” he adds.

To reveal the level of frustration, the survey asked participants whether having a legitimate transaction denied or delayed was more frustrating than going to the Department of Motor Vehicles, considered by many as the epitome of poor customer service, Liesendahl says. More than a quarter, or 27%, felt a delayed transaction was worse than visiting the DMV, he adds.

The survey’s finding help support what Accertify has been preaching to merchants about finding a proper mix of fraud-prevention measures, Liesendahl says.

“Fraud systems should be set by platforms that go on and off when certain transactions are taking place,” Liesendahl explains.

Liesendahl wonders why an online shopper who has entered the three-digit security code for his credit card on the merchant payment page would need to do that again, if that card was accepted and a transaction was authorized in the past with no problems.

Ed Falco, a customer-service fraud and compliance expert for New York-based Auriemma Consulting, agrees that too much fraud protection becomes a sore point for consumers.

“The numbers in the Accertify survey fall in line with research we have done at Auriemma, and it indicates that balance is the perfect place to be in operating fraud protection,” Falco says.

Consumers are far less comfortable using their mobile devices for true online purchasing than when using them to access a mobile-banking application or visiting a recognized retailer site, Falco suggests.

Consumers see reports in the media about the “hackability” of cell phones and tablets, creating the underlying feeling that they generally do not view those devices as secure, Falco adds.

The study’s findings suggest that consumers ages 18 to 24 are more likely to take business elsewhere if they encounter transaction delays, with 25% saying they would immediately move to another company. In addition, those in the 55 and older range were found to be more tolerant of delays and more trusting of online shopping in general, with 54% feeling fraud occurs more often online than when shopping in person.

Those numbers indicate that “one-size-fits-all” fraud protection would not work and that online fraud protection should be customized to fit the customer, Liesendahl says.

Accertify informs merchants not to “red flag” a transaction on the payment site because it makes it too easy for fraudsters to pinpoint what triggers a denied transaction, Liesendahl says. Thus delaying shipment of the goods while trying to determine authenticity after the consumer completes the transaction process represents the most common method of denying a transaction, he adds

“But if the consumer feels he has paid, he is expecting that the shipment is coming,” Liesendahl says. “When he finds out it is not, that just adds to the frustration of a legitimate customer.”

Online merchants should recognize the delicate balance between too much fraud protection and not enough in the right places, Liesendahl contends.

“If you get it wrong, the penalty is high in lost customers,” he says. “A merchant’s revenue protection department should not become an anti-revenue department.”

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