The Internet is often compared with the wild American west, and e-commerce seems to be the manifest destiny of early Web explorers.
In spite of the dangers from train robbers, cattle rustlers and assorted other scoundrels, early American settlers pressed westward to the Pacific, and the bad guys were unable to prevent the law abiding citizens from establishing civilization. Likewise, Web surfers continue to spend online, despite the notorious crimes perpetrated by a motley crew of cyber-tramps and thieves.
Fear Is No Barrier
Increasing numbers of consumers all around the globe are venturing online to barter, shop and bank. Many of them are nervous, to be sure, but an overwhelming optimism that security issues can and will be solved seems to be overriding cases of the jitters.
E-commerce security is not a single large nut to crack, however. It is a bundle of security-related issues that cover everything from exposing personal financial accounts to unauthorized eyes to theft of intellectual property to outright hacker attacks.
Last spring, U.S. Federal Trade Commission (FTC) chairman Robert Pitofsky said that identity theft is hampering the full growth of electronic commerce. Pitofsky claimed that 61 percent of people who surf the Internet do not make purchases out of fear for the security of their private information — and 90 percent of those who do buy goods online have expressed concerns about doing so.
But indications are that even though privacy and security top the list of issues for Internet shoppers, those concerns have not been a barrier to the explosive growth of consumer-driven e-commerce. Despite growing unease over the flagrant successes of cybercriminals, e-tail revenues continue to soar.
Consumer confidence is undoubtedly bolstered by government efforts to lead the way in establishing effective security measures. The European Union (EU) has taken a very strong stance on privacy issues, and in the United States, several states have enacted technology laws, while both President Bill Clinton and U.S. Attorney General Janet Reno have called for aggressive action to ensure consumer privacy and fight cybercrime.
In a concerted effort to spur the growth of e-commerce and other technology firms in the state, Maryland Governor Parris Glendening signed 12 technology initiatives into law that are designed to provide security and privacy protection for consumers and give law enforcement agencies greater crime fighting power.
President Clinton gave e-tailers a do-or-die message earlier this year, warning them that if industry does not take steps to protect consumers, the government will. Speaking of e-commerce, Clinton said, “the continuing success of [this] phenomenal enterprise, which has no parallel in history, requires us to seriously take into account that core of what makes America a unique place, that freedom requires a certain space of privacy.”
And Attorney General Reno called cybercrime “one of the most critical issues that law enforcement has ever faced.” In a hearing before the Senate Appropriations Committee, she said, “We are taking the attacks very seriously and we will simply do everything in our power to identify those responsible and bring them to justice.”
While many e-tailers express concern over the high cost of implementing the latest privacy and security technology, or the ramifications of increasing government intervention in e-commerce, it seems clear that business will heed the call for action when it directly impinges on market share.
Recently, U.S. and EU negotiators were able to reach a formal agreement on a much-needed deal that would guarantee privacy protection for EU member consumers who do business with U.S.-based e-tailers. Under the terms of the agreement, U.S. companies will be allowed to do business in Europe as long as they agree to abide by European privacy laws, or equivalent measures, when dealing with European consumers.
Many companies quickly found ways to accommodate the stricter EU security requirements in order to do business across the Atlantic.
As in any young venture, much of the difficulty in forging privacy and security standards lies in establishing fundamental principles. While there is no dearth of suggestions for what needs to take place to achieve a safer Internet, there is a dearth of agreement.
Less Information, Please
In June, The Electronic Commerce and Consumer Protection Group, a working group comprised of seven of the world’s leading Internet and e-commerce companies, proposed a set of guidelines designed to protect online consumers and “inspire global discussions of legal issues related to consumer transactions in the borderless, instantaneous new medium.”
“At the very least, according to the guidelines, merchants should notify consumers what information is being collected and how it will be disseminated. Consumers should also be given a choice as to how the information will be disseminated to third parties for marketing purposes. Consumers should also be provided with reasonable access to their own records upon request.”
Consumers want law and order on the Internet, but they probably do not want much beyond the assurance from some reliable source that it exists.
Some companies, notably AOL, are taking a simple approach to improving consumer confidence in Internet security. AOL has launched a campaign to persuade Net surfers that it has the best security measures on the block.
The company wants to be known as the safe place on the Internet to shop. Not “a” safe place, mind you — “the” safe place. And AOL is well on its way to making that claim stick — simply by saying it over and over again in its advertising. Before long, most Americans will know that AOL scrambles credit card information sent over the Internet — even those who have never even ventured online.
Because anxiety over Internet security is as much a threat to e-commerce success as the most cut-throat competition, perhaps other e-commerce firms should take a page from the AOL playbook. Building the perception of e-commerce security may not be as simple as emphasizing the word “secure” in their advertising copy, but then again, it just might be that simple.
After all, more and more shoppers are being swept up in the wave of e-commerce enthusiasm generated by the first few intrepid Internet explorers, and all they need is a little encouragement to open their wallets on the Web. The paradigm has shifted. E-commerce is no longer a ruffian’s game in the lawless outlands of the global economy.