Australian Institute of Criminology

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E-commerce fraud on the internet rarely reported

Media Release

17 January 2002

17 January 2002

The Australian Institute of Criminology today released a report which examines the fraud risks associated with commerce on the Internet in business and government contexts, focussing on the Asia-Pacific region.

Commissioned by the Confederation of Asian and Pacific Accountants (CAPA) which represents national accountancy organisations in 21 countries, the report identifies key risk areas and discusses various strategies to control the problem in the Asia-Pacific region.

In releasing the report, the Director of the Australian Institute of Criminology, Dr Adam Graycar said "As in other areas of fraud, Internet fraud is infrequently reported to authorities for investigation. Official statistics do not generally isolate the specific means by which fraud is perpetrated, making them of little use in quantifying the scale of the problem. The incidents of Internet fraud that are disclosed publicly represent only a small proportion of the total number of incidents that occur." General estimates of consumer-based Internet fraud indicate that between five and ten per cent of on-line transactions may involve fraud. Fraud involving business and government is likely to be of a similar magnitude.

Although the expansion of the infrastructure that supports the Internet is variable across the countries examined, it is clear that the Asia-Pacific region will have the largest number of users of the Internet of all regions globally in the near future. One estimate indicates that the region will have around 242 million Internet users by 2005.

Dr Graycar said that fraud prevention in the Internet age requires the use and adaptation of traditional measures (such as the use of appropriate fraud control policies and the provision of information) as well as the use of novel technological approaches (such as the use of effective means to authenticate users of computers and to track how they are using computers). Fraudulent conduct may also be deterred through the use of prosecution and punishment, although in the Internet age this is often difficult and costly to achieve.

A seven page summary of the report, Controlling Fraud on the Internet: A CAPA Perspective by Dr Russell G. Smith and Dr Gregor Urbas is available from the AIC.