A consumer stands a greater chance of being struck by lightning than falling prey to identity theft after paying a bill online. In fact, individuals actually reduce their overall risk of identity theft when they participate in some online monetary transactions.
But as electronic transactions proliferate, consumers will naturally want to weigh the benefits against the risks. And to be sure, identity theft is growing. The Federal Trade Commission pegs it as the nation's fastest-growing crime. Still, it's no exaggeration to say the misperception is one of the main reasons consumers are staying away from all types of electronic commerce.
Twenty-seven million Americans became fraud victims during the last five years, one-third of whom were targeted during the last year alone. That has cost financial institutions, merchants and other businesses an estimated US$46.9 billion annually.
The average new-account identity theft case costs businesses US$10,200, with a US$1,180 out-of-pocket hit to customers that's followed by 60 agonising hours of restoring personal records and reputations back to health.
Ironically, consumers are afraid of the very antidote to the problem.
We've found that consumers can reduce their likelihood of being victimised by 10.4 percent through the use of some online services, such as banking, bill payment and account management. If all Americans started to fully use available electronic banking and bill payment services tomorrow, some US$2.37 billion in identity fraud would be prevented during the next year, while another US$2.5 billion would be saved in the same time frame period through improved detection.
So what's the hang-up? Security fears represent the largest obstacle in getting consumers to bank and pay bills electronically. That points to a need for an industry-led campaign to highlight the benefits of electronic transactions, since in reality, an educated public is a far more protected one.
Electronic banking and bill payment could be used to significantly reduce the paper culprit behind a significant number of online fraud cases. The art of identity theft is not necessarily always high-tech; and credit card fraud on the Internet often begins offline.
Dishonest relatives and acquaintances swipe the personal information necessary to perpetuate the crime from pieces of paper; others scrounge through trash bins for discarded checks, deposit slips and credit card statements, or steal statements and the like right out of mailboxes. Switching to electronic statements and checks is a cost-free means for consumers to reduce their chances of becoming the next victim of identity theft and fraud.
Expanding the argument in favor of managing bank and other financial accounts is the ability to track activity in real or near-real time. While paper statements come in the mail for a monthly viewing, electronic statements can be viewed at any hour of the day and as frequently as desired, even from remote locations.
And, as consumers increasingly receive e-mail alerts of certain account activities--such as payments, withdrawals or balances that fall below minimum levels--they are nearly four times more likely to spot suspect transactions ahead of individuals who get monthly paper versions in the mail.
Those all-too-common lists of identity theft prevention tips need to start including what to do on the Internet, not just what not to do.
The personal benefits of online banking and billing are significant, including time savings and improved financial management. Banks and billers that offer online services realise a closer relationship with customers and a reduction in transaction costs, for increased profit.
But banks and billers need to start offering more online services, and they need to allow consumers to turn the paper off. Consumers should switch from paper and mail services to online banking, billing and payments, and in the process, they'll reduce their risk of becoming the next victim. With a potential US$4.86 billion in nationwide identity theft reduction, everyone but criminals will benefit.
I am one of the people online that does not use credit cards to make purchases. I do bank and pay bills online and would never go back to paper. I have been treated as a second class citizen when it comes to E Commerce.
I have found a company called www.usemybank.com that allows web merchants the ability to take instant online debit payments from the major online banks in Canada and is adding major US banks now. This is as easy as paying a bill at your bank and the merchant gets instant confirmation of your payment.