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Securing China's e-commerce growth

By Jeff Liao (China Daily)

08:26, November 20, 2012

Between June 2011 and 2012, China's Internet population reached 538 million, of which some 194 million had shopped online. Online retail sales in China have soared in recent years and are expected to hit $360 billion by 2015 - up from about $121 billion in 2011 - according to The Boston Consulting Group.

Impressive as the numbers are, there's another set of statistics that's even more striking: Nearly one-third of the online shoppers in China fell prey to fraudulent websites during that period, costing them $4.7 billion, according to the China Electronic Commerce Association.

The tricks deceptive online sellers use to swindle unsuspecting customers are many. But cyber-crime spans many more fraudulent activities than just deceptive sellers. Without safeguards against the peddling of counterfeit goods, bogus websites, stolen payment card data and other tricks of the trade, cyber-crime can erode consumer confidence and stifle legitimate online business. The good news is that both the will and the means to deal with the problem exist.

The Ministry of Commerce recently announced it would introduce more specifications to better guide the development of e-commerce in the country. And the public and private sectors are exploring ways to further build trust, integrity and security in the burgeoning industry.

At the World Economic Forum in Tianjin, a multi-stakeholder group called Partnership for Cyber Resilience Initiative shared its best practices on cyber risk and security with members of the government and business. In July, the Payment and Clearing Association of China hosted a symposium that was supported by the People's Bank of China and co-sponsored by Visa and China Union Pay on how to secure payment systems, with e-commerce featuring prominently.

Another initiative, the China eCommerce Protection Task Force, is taking shape. Industry stakeholders, including banks, payment service providers, payment systems and brand owners will share information on emerging threats in intellectual property infringements and payment fraud. They will coordinate efforts between the owners of brands, whose products are being counterfeited, and the payments industry to mitigate illegal activities.

As technology and the Internet broaden our reach into other markets and segments of society, they also broaden the opportunity for criminals to act. Cyber-criminals are becoming increasingly sophisticated and can launch an attack from anywhere. According to security firm Symantec, 90 percent of online breaches involve organized crime targeting corporate information.

What's most worrying about online fraud is that it is becoming harder for merchants to detect, according to my colleague, Michael Bradley, who is the Asia-Pacific managing director of CyberSource. A Visa company, CyberSource is one of the world's largest providers of e-commerce payment management solutions with some of the best-in-class fraud management services for merchants. The CyberSource 2012 Online Fraud Report indicates that about 50 percent of online merchants say that fraud today is "cleaner", meaning that fraudulent orders look like valid orders.

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