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Online credit card fraud against small businesses

Kate Charlton and Natalie Taylor
ISBN 0 642 53846 8 ; ISSN 1326-6004
Canberra: Australian Institute of Criminology: 2004
(Research and public policy series, no. 60)

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Section 7 : Perceptions of financial institutions

If businesses only become aware of their liability for online fraud after experiencing such fraud, and if the delays in notification of the fraud are substantial, how does this affect attitudes of business retailers toward their financial institutions? Perceptions of financial institutions were investigated (see Table 6) and key findings were that:

  • approximately half of online retailers (44%) believed their bank to be helpful when they had a query about accepting payments online while 30 per cent did not;
  • 56 per cent of online traders felt that the information provided about online trading was easily interpreted while 28 per cent did not;
  • in relation to general dealings (not just online trading), 58 per cent of all businesses believed their bank had been helpful and supportive in general while 30 per cent did not; and
  • only 13 per cent agreed with the statement, 'Banks care about the losses of small businesses from credit card fraud over the internet.'
Table 6: Retailers' perceptions of banks (row percentages)
Statement (a) Agree Neither agree nor disagree Disagree Can't say n
The bank is helpful whenever my business has a query about our internet payment systems (b) 44 18 30 8 144
The information provided by the bank in relation to accepting payments over the internet is easy to understand (b) 56 10 28 6 144
In general we have found our bank to be supportive and helpful in our dealings with them 58 9 30 3 1,078
Banks care about the losses of small businesses from credit card fraud over the internet 13 6 67 14 1,078
(a) Statements were measured using scale 1 to 5, 1=strongly disagree and 5=strongly agree
(b) Only those businesses trading online provided responses to this statement
Source: Australian Institute of Criminology, Online credit card fraud against small business 2003 [computer file, unweighted data]

The predictors of whether retailers believed their bank was 'supportive and helpful' were found, through a multiple regression analysis, to centre on proprietors' own experience of online credit card fraud and their understanding of the financial consequences of a fraud incident. In sum, negative attitudes were significantly associated with:

  • being male;
  • being an online fraud victim; and
  • believing that the business victim was responsible for the costs associated with fraud.

Online traders who had not experienced fraud did not differ in terms of their attitudes toward financial institutions from retailers who did not trade online, strongly confirming that it is indeed the experience of fraud which leads to negative attitudes through victims becoming aware of their liability for the fraud. An implication from these findings is that it would benefit financial institutions to clearly convey information to online traders about both their liability in the event of fraud and appropriate fraud prevention measures before they commence trading online.