from the April 2009 issue

$5b. a year is the cost of on-line fraud

"E-commerce is one of the great promises of Internet business, but it has never really taken off, nor has it ever really failed," said Prof. Sheizaf Rafaeli at the Consumers Online panel at the Israel Internet Association 2009 Conference today.

Rafaeli presented findings of a Ministry of Industry, Trade and Labor survey of 1,500 surfers aged over 14, conducted in January. He said that over 3.3 million people, 61.6% of Israel's over-14 population, said that they used the Internet in the past year. The most common uses were e-mail (85% of respondents), searches for information (82%), and news (81%). Interestingly, 90% of the respondents said that they surfed the web in Hebrew, and 25% said that they also surfed via their cellular telephones. Fraud Sciences founder Saar Wilf said that on-line fraud was increasing in parallel with the increase in e-commerce. "Annual losses from on-line fraud total $5 billion: $4 billion in cash losses, and $1 billion spent on preventing future fraud. To this should be added the unquantifiable losses from missed opportunities."

Wilf added that the typical on-line thief was a young man in a developing country with a developed Internet infrastructure. He said, "There is also advertising fraud. A website advertises on another site and pays for it, which makes it possible to generate fictitious hits and traffic for which money is charged. This is a fairly new fraud, which largely developed on the basis of Google's model. It causes millions of dollars in losses a year."

Reprinted from the Israel High-Tech & Investment Report April 2009

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