Online fraud is a huge problem in the UK. It can have serious effects for both consumers and businesses, but many don’t know how it impacts them personally- until they’re hit by it.
It affects everyone, even the best of us. Many people think that they will never fall for it, but all it takes is one slip-up and you might end up giving away your bank information or having the credit card number on your computer stolen. The cost associated with this type of crime also reaches beyond monetary loss.
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It is important for both businesses and customers to realise what fraud can do. The cost of online fraud is astonishing as revealed by interactive data displayed by Skurio.
The daily cost of fraud – which has surpassed £375 million – is making consumers miss out on the opportunities of purchasing some of their regularly purchased items. Consumers could have bought 136,488,169 cups of coffee; 7,325,184 tanks of petrol; and even 75,068 round the world flight tickets!
This can lead to serious financial problems for consumers, particularly if they rely on credit cards. When you put these figures into context like that, it’s easy to see why businesses are looking for things like domain monitoring.
Ways that Fraudsters use to Scam Consumers
Fraudsters use many ways consumers are being deceived, including identity theft, individual health care scams, fake sweepstakes and contests winning notifications, illegal telemarketing calls or texts, and unauthorized credit card charges that are hidden in billing statements.
Most people don’t think about what happens after fraud has taken place, they just assume that the business will deal with the fraud and go on as usual. But this isn’t always the case. There are many effects of fraud on consumers and Impact on consumer confidence is one of these effects.
Consumer confidence is a key factor that helps drive the economy. But why does it matter to us so much, and what exactly makes up consumer confidence? Let’s find out.
1. Impact on business reputation
The effects of fraud are sometimes felt by different parties who are usually not even involved in the fraud itself. For example, if a company has been guilty of fraudulent activity before, it’s common for other companies and organizations to avoid dealing with them, fearing they may be scammed as well.
2. Consumer Trust is broken
Amazon is currently one of the biggest online store retailers in the world. One of the reasons it became that big is because people trust Amazon and they buy from there.
Imagine if someone found a way to hack into Amazon accounts and purchase stuff from them, this would cause a lot of people including me to lose their trust in Amazon for sure.
Fraud can break the most basic of human instincts – trust. After a fraud incident occurs, consumers will most likely become more cautious about their transactions and where they make them from.
Furthermore, this can affect how businesses operate as they need to ensure that consumers can trust them and their products.
3. Decreases public confidence in financial institutions
Public confidence is key for banks and other finance-related organizations to retain customers’ business, as well as attract new ones. Consumer confidence plays a direct role in the speed and direction of economic activity.
4. Reduces spending power
Fraud can also reduce financial power as consumers spend their money carefully, and avoid unnecessary expenses to prevent falling prey to another scam. In the US alone, at least 10% will likely become a victim to a scam or fraud annually.
5. Affects credit rating
A poor credit rating can make it harder, and more expensive for people to borrow money from banks as they will have a lower trustworthiness score. When making decisions to invest in a business or not, people often take into account the reputation of that business.
If they feel like giving their money away to scammers, chances are they will do it elsewhere too. With people becoming more conscious of scams and fraud, it is no wonder the world economy has had some rough patches in recent years.
It can be hard to imagine today that one man could have stolen so much from his friends, family and others. However, this shows just how far fraud can affect everyone’s lives – even those who aren’t directly involved with a scam.
With investors and consumers becoming more aware of scams and fraud, businesses will have to work harder in order to earn the trust and business of their clienteles.