An Analysis on Retail Industry Privacy and Security Perceptions Surrounding the Online Marketplace

Retail Industry Credit Card Fraud E-commerce

Undeniably, the paradigm of consumerism has shifted more recently from brick and mortar to the online marketplace. According to the National Retail Federation, an upward mobility of online consumerism will increase by an estimated twenty percent to twenty-three percent on a year to year basis as sales will start averaging around $211.4 billion annually (Rayport and Sviokla, 1994). Consumer perception of perceived risk and actual risk typically are one of contrast. A study conducted by Miyazaki and Fernandez looked at main perceptual factors that reoccurred throughout their analysis of online shopping: Privacy (Infringement by Online Retailers), System Security (Third-Party Fraudulent Behavior), Security (Fraudulent Behavior of Online Retailers), (Inconvenience of Online Shopping), and (Miscellaneous, nonsense and uncategorized response) (Miyazaki and Fernandez, 2001).

With more than thirty-seven percent gathered from one hundred and sixty total responses, fear of fraudulent third-party behavior was the most perceived risk for online consumers. This perception was analyzed further and researchers discovered that fear of compromised credit card information and identity theft was the highest in terms of third-party fraudulent behavior. Interestingly, perception of security and privacy seems to lay heavily on implications of consumers’ knowledge. Miyazaki and Fernandez demonstrate this finding by ascertaining consumers’ knowledge of an increase in perceived risk while dining out at a local restaurant.

When an individual dines out at a restaurant, once the bill comes at end of meal, an individual makes the conscious decision to hand the waiter their personal credit card. Knowingly, they are trusting that the employee is not having a bad day and decide to steal their credit card information, thus, the perceived risk is lowered. However, the actual risk is quite higher in this scenario as human behavior is the least controlled variable in any given situation. Consumers constantly trust random individuals, and in this case, the waiter of the restaurant, to not steal their credit card information during mundane transactions. However, actual risk is heightened here as the opportunity to commit fraudulent behavior is more easily accessible.

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With the online marketplace, technology and constant surveillance of account information makes actual risk of fraudulent third-party behavior decrease. Identity and financial threats are still, plaguing the online marketplace today, however, Miyazaki and Fernandez want consumers to understand that more safeguards are in place for the online marketplace, and although no safeguard is bullet proof, over time, consumers’ perceptions of risk and security will expectantly change with concurrent data research.


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