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Cybercriminals are waking up to the value of e-commerce

As Chinese consumers grow in sophistication and seek to benefit more and more from international trends, they might sometimes pause to think what they are asking for.

In the first few days of this year, Chinese media broke the news that swathes of customer data had been stolen from the country’s top third-party payment platform, Alipay.com, a subsidiary of e-commerce giant Alibaba. The convenience of internet shopping can come with a nasty price tag.

A former employee at the payment platform named Li Ming swiped information on some 30 million customers back in 2010. That led to the detainment late last year of a partner of his who sold off some of the information.

This was an unwelcome introduction to the world of cybercrime for many consumers, just as the country stands on the brink of a massive breakthrough in e-commerce. The number of online buyers in China will reach 356 million in 2014, surpassing the entire US population, technology research firm Forrester said in a report released on January 5.

Getting Chinese to part with their cash online took some doing. Typically conservative with personal finances, they were even hesitant to adopt credit cards when they were first offered by banks.

Today, Chinese are depositing their savings into online funds that serve as attractive alternatives to traditional bank accounts. Deposit rates are fixed by the government at about 3% while online funds promise higher returns. The level of trust Chinese have vested in online services has grown rapidly.

Security breaches are not uncommon. Chinese internet users are familiar enough with such problems to know to watch out for “phishing” schemes, a common form of internet trickery where users are lured toward entering sensitive information on web pages designed to look like that of a bank’s or other financial services. But they have rarely been subject to the scandals that hit the US and Europe.

Just last month, US consumers were hit with yet another large-scale online theft. Target, the third-largest retailer in the US, said information on 40 million payment cards were hacked during the peak holiday spending season. If this becomes a habit it in China, it could hurt e-commerce growth.

That may have already started. Alipay claims that bank card numbers and passwords weren’t included in the digital cache. Nevertheless, the incident, dubbed “internal ghost leak” by Chinese newspapers, has led to somewhat of a backlash in the e-commerce market. Industry experts have come out to warn that companies cannot be complacent to cybercrime and must step up their ability to protect customer privacy while they strive to offer new online banking, payment and investment services. 

Yet Chinese companies are hardly renowned for their willingness to put consumer interests first. Even transparency, a crucial element in winning consumer trust when such incidents happen, isn’t easy to come by. Exactly how many customers were affected by the Alipay leak is still unknown.

Article source: http://feedproxy.google.com/~r/cer-business/~3/jsDmcYIgnOQ/China-online-cybercrime-ecommerce-alibaba-zhifubao-alipay

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