Impact of cyber fraud and trust of e-commerce system on purchasing intentions: analysing planned behaviour in Indonesian business

The number of Internet users has grown exponentially. The evidence is not only demonstrated by figures in developed countries but also in developing countries, such as Indonesia. Internet technology has been adopted for multiple applications like e-government, e-learning, and e-commerce. Many prior studies found that e-commerce provides advantages. For instance, flexibility and efficiency are advantages which can be achieved by e-commerce. However, e-commerce has disadvantages such as frauds that remain serious threats. Recent reports have found that fraud incidents on e-commerce are increasing with many victims and losses. These reports are likely to affect the trust of parties which are involved in e-commerce systems, particularly customers. Therefore, this study attempts to address this problem by investigating the presence of trust and cyber-fraud perceptions on customers’ intentions to purchase using e-commerce. This study developed a conceptual model by integrating trust and cyber-fraud perceptions using the theory of planned behaviour (TPB) made up of attitude towards behaviour, subjective norm and perceived behavioural control. Trust in this model is defined by two constructs of trust of sellers and trust of the (Internet) medium. In addition, previous studies have not investigated cyber-fraud perception as a moderator of the relationship between trust of sellers and intention to purchase using e-commerce. Accordingly, this relationship was tested to reveal the role of cyber-fraud perceptions. Furthermore, direct effects of cyber-fraud perceptions, trust of sellers, and trust of the (Internet) medium towards intentions to purchase in e-commerce were also examined. The study was undertaken in Indonesia by investigating customers’ perspectives of e-commerce transactions. A survey was conducted through an online questionnaire and received 602 valid respondents. For data analysis, structural equation modelling (SEM) was applied. Since the distribution of data was non-normal, a model fit examination employed bootstrapping. The results of this examination demonstrate that the model is robust, parsimonious, and fits the data well. The results of the study indicate that Indonesian customers’ purchase intentions using e-commerce are negatively influenced by their cyber-fraud perceptions. Consequently, the more information on or the more experience with cyber-fraud incidents customers have, the more likely they will not commit transactions in e-commerce. However, cyber-fraud perceptions do not decrease customers’ trust of sellers when intending to buy in an e-commerce environment. In addition, cyber-fraud perceptions do not influence attitude towards behaviour of customers. Furthermore, trust of sellers, attitude towards behaviour, subjective norm and perceived behavioural controls are essential factors to promote customers’ purchase intentions using e-commerce. In contrast, trust of the (Internet) medium is not necessarily an influence on e-commerce customers’ intentions to purchase. In relation to customers’ attitudes towards behaviours, tests show that trust of the (Internet) medium influences this factor, whereas cyber-fraud perceptions and trust of sellers do not. The study highlights that cyber-fraud perceptions and trust of sellers are two salient factors of concern to e-commerce retailers. Consequently, sellers are urged to have programs to advance seller-buyer relationships. Furthermore, in order to develop and counter publicity creating negative customers’ perceptions toward cyber-fraud, sellers are advised to educate customers regarding e-commerce systems security and proper behaviour while completing transactions. Finally, other parties such as governments and commerce agencies are urged to provide support in developing a safe e-commerce environment.