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Are Small Firms Making the Most of the Internet?
Fear of online fraud is thought to be responsible for a general reluctance among small businesses to embrace ecommerce. With figures from the House of Lords Science & Technology Committee, the Federation of Small Businesses (FSB) say that only 18% of small business sell products or services online. Less than 1% made all of their sales through the Internet.

The wide geographical reach of the internet makes it possible for small businesses to compete successfully in the worldwide market, yet despite these advantages it seems many are reluctant to seriously embrace ecommerce as a viable revenue stream. The perceived risk of online fraud is seen as stumbling block, with 19% of businesses citing it as a significant concern. That said, only 6% of businesses had actually experienced online credit card fraud themselves.

The report highlights the number of small businesses that are deterred from going online and tapping into the power of internet. The FSB are keen to support moves to tackle online crime – many of which were outlined in the House of Lords report. Currently there is limited research into e-crime and little redress for victims of online fraudsters. Recommendations in the report include a move to allow e-crime victims to report internet crime to police and receive a crime number – just as they would with any other type of crime.

Another area which needs some regulation is the banks reluctance to take responsibility for losses incurred through electronic fraud. Many small businesses have suffered crippling charge-backs from card fraud - often received months after the original transaction was successfully processed.

A spokesperson for the FSB added: “E-crime needs to be given the same status as crime that is committed against a bricks and mortar business. Only when this is accomplished, by implementing the Lords recommendations, can more small businesses benefit from having a stronger online presence.”

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