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There’s Nothing Like Fraud for the Holidays

Unique In-Depth Survey of New York State Internet Users Notes Problems with Online Auctions, Badware, Protecting Personal Data

ALBANY, December 17, 2008 – Be careful what personal information you part with when making last-minute online holiday shopping purchases. Almost one in five New York state Internet users received a notification from their bank or credit card issuer in the last year saying personal or financial information had been compromised.

There are many other types of online risks, says a survey released today by Consumer Reports WebWatch, the Internet integrity division of Consumers Union, and about one in four of us face them:

• More than a quarter of New York state residents have had a bad experience in an online auction.

• About the same number (24 percent) encountered a malicious software infection. Of those, 20 percent had to reformat their hard drives.

• More than 75 percent received a fraudulent e-mail offering illegal prescription drugs or phony congratulations on winning a bogus lottery.

• 33 percent received offers to participate in check fraud scams.

The survey was commissioned by Consumer Reports WebWatch as part of its “Look Before You Click” campaign, supported by a CyberAwareness Grant from the New York State Office of Attorney General and the U.S. Federal Trade Commission. The survey represents one of the most comprehensive studies of New York state Internet users, their behavior and their problems with online fraud in a variety of environments: Online auctions, shopping, e-mail and spam, privacy and others. The whole survey is available today for the first time.

“There’s good news, and there’s bad news,” said Beau Brendler, director of WebWatch. “People in New York are dealing with spam, fake lottery scams and some privacy concerns. But a significant number of us still have much to learn about protecting ourselves from con artists, fraudsters and other criminals on the Internet.”

Seventeen percent of respondents had a problem getting their money back from an actual online purchase. More than 20 percent of these respondents reported not getting their money refunded from a problematic online transaction. Creating a special credit card account to use only for online transactions is one way to address online fraud and privacy concerns. However, relatively few New York state residents reported taking this action – adults ages 25-34 the most often, at 11 percent, similar to other age groups. Slightly more said they used this tactic when trying to avoid problems with badware.

Badware Hassles and Risks
Almost a quarter of New York Internet users have encountered a badware problem over the past year, often slowing their computers and prompting them to run software to fix the problem, according to the survey. Badware – known also as spyware or malware – maliciously infects computers from a variety of sources: Infected Web sites, memory sticks, even digital picture frames.

It ranges from relatively annoying – prompting unwanted advertising to pop up on your computer screen – to actively dangerous, introducing programs that can take control of your computer without your knowledge, sending your private data to a third party. Badware can even link your computer to worldwide organized crime networks which, in turn, use it to attack financial and government institutions.

That said, a big percentage of New York state residents say they take precautions against malicious programs – 83 percent say they use anti-virus software, 80 percent say they use a firewall. Only 3 percent said they used none of the listed protective measures in the survey. In addition, men were slightly more likely to use certain types of protective measures on their computer than women, and were slightly more likely to have a badware infection in the last 12 months.

Online Auctions – Great Bargains, Possible Problems 
For more than two years, online auction fraud has been the number one complaint of New York state residents to government organizations that keep track. The WebWatch survey shows that 27 percent of state residents who have ever used an online auction Web site, such as eBay or Amazon, have experienced a scam or deceptive practice – 32 percent of eBay users were scammed.

Eleven percent of online auction site users reported they never received the goods they bid on, the most common complaint. In addition, seven percent of survey respondents who received their goods said they were not in the condition they expected. Other common complaints included not being told a key detail about the item before it arrived (7 percent) and being sent an item of lesser value than the one they actually bid on and won (7 percent). Read details of our in-depth investigation of auction sites, including lessons learned by New York State residents:

Taking Protection Steps
New York consumers do appear to be taking significant steps toward protecting privacy. A little over half say they have deleted “cookies” – programs placed on your computer by Web sites for purposes ranging from remembering your shopping history to behavioral tracking. Older users are least likely to delete cookies – 57 percent said they did not.

Interestingly, those most likely to change account information on a Web site to limit the amount of personal information stored there, were the youngest age surveyed, 18-24-year-olds at 43 percent. The least likely to purge personal information were people 65 and over at 7 percent.

Users are wising up to spam e-mail messages telling them they have won a lottery. More than 80 percent say they simply delete these e-mails. About 40 percent say they add the senders’ address to their e-mail program’s spam list. Prescription drug offers are the most common type of spam e-mail received by New York state residents, with 64 percent saying they received one of these in the last year. Overall, men reported receiving higher levels of spam than women.

Protecting Children Online
Of survey respondents with children under 18 in the house, close to half aged 25-54 say they keep the family computer in an open area where kids’ Internet use can be watched. Older parents are slightly more likely to talk to their children about avoiding and defending against cyberstalkers. The same is true, according to the survey, among parents who talk to their children about avoiding online scams. Interestingly, parents aged 25-34 were most likely, at 18 percent, to prevent their children from using the Internet at all. Only 9 percent of all parents prevent their kids from using the Internet.

The survey was commissioned by Consumer WebWatch, designed by the Consumer Reports National Research Center and conducted in May with a sample of 2,008 panelists representative of the geographic population distribution of New York State. Eligible respondents had been using the Internet more than a year and owned a home computer for at least six months. The sample was representative of New York State residents who had been online at least a year and is not nationally representative. Results may differ for a sample of less experienced users.

For additional information on Internet threats and how consumers can protect themselves online, visit theConsumer Reports Online Security Guide, which features a new musical video commissioned by WebWatch called “Gone Phishing,” developed to educate consumers about the dangers of e-mail phishing scams.

About Consumer Reports WebWatch
Consumer Reports WebWatch is the Internet integrity division of Consumers Union, the nonprofit publisher of Consumer Reports Magazine, the Consumer Reports on Health and Money Adviser newsletters, and a variety of sites advocating consumer rights in the marketplace. We research and investigate Web sites on behalf of consumers, and we advocate for consumer-focused Internet policy and governance. Consumer Reports WebWatch accepts no advertising. Consumer Reports WebWatch is a member of the Internet Society, a grassroots group focused on Internet policy; and is an atlarge structure (ALS) in the user community of ICANN, the Internet Corporation for Assigning Names and Numbers. WebWatch also serves as an unpaid special adviser to StopBadware.org, a “Neighborhood Watch” initiative led by Harvard University’s Berkman Center and the Oxford Internet Institute devoted to helping Internet users avoid downloading malicious spyware, adware and malware programs. With the Center for Media and Democracy, WebWatch publishes Full Frontal Scrutiny, dedicated to exposing the activities of front groups in modern media and culture.