Identity theft is a big concern for online consumers. They want to
know their private information is secure. They don't want their credit card
numbers and other data falling into the wrong hands.
Companies vary widely in how well they're protecting consumers, says Tim
Richardson. He's an e-commerce professor.
"Some companies are handling it well and making it a 'sellable,' meaning
that in a competitive environment they're saying, 'We know you're freaking
out about security, so we've got [these security measures], and therefore
we're handling it better than the competition,'" says Richardson. "Other companies
are just ignoring it or not dealing with it too effectively."
Privacy Policies Confusing
It's not enough these days for companies to protect online buyers' information.
They also need to develop clear privacy policies and communicate them to the
public. Privacy policies explain what information is being collected and how
it will be used.
Rebecca Jeschke. She's with the Electronic Frontier Foundation (EFF). The
EFF is an advocate for the public's digital rights.
"The devil is in the details," says Jeschke. "Many privacy policies are
one-sided in the service provider's favor, written for their benefit and not
"Even more importantly," Jeschke adds, "most users never even bother to
read, let alone understand, these policies, filled as they are with confusing
The companies that will be most successful at e-commerce will avoid confusing
legalese. They will put customers at ease while meeting the privacy and security
demands of financial institutions, the government and consumers.
Bob Travica says companies in the U.S. are legally required to have privacy
statements on their websites. He's an associate professor of management information
"Customers need to give their consent in order to have their personal data
recorded by companies," says Travica.
"What really happens with this data later on is not always clear -- if
the data can be resold, used by somebody else, used for promotional things,"
"I don't think there are authorities that can track this down, really,
and you can all of a sudden start getting e-mails or calls from some company
you've never heard of, and you can't track down the source of your telephone
number, how it got to this company or your e-mail address... I would say that
certain advances have been made in protecting personal data, but there is
still much territory to cover."
Data Security Much Better Today
How companies handle the customer data they collect is one issue. Another
is how well they protect financial information such as credit card numbers
from hackers determined to get that information.
"The issue is security of data," says Travica. "Can a credit card number
be hacked by some insider in the organization who has access to information
systems, or can it be hacked maybe by some external intruder? That's really
"But in terms of technical solutions we have today, we have come a long
way, because there are secure connections," Travica adds. "Encryption has
increased so much that... to crack down an encrypted message that contains
credit card numbers would take some supercomputer 30 years or something like
that, so we are pretty good in that respect, which was not true five or seven
It's not just large businesses that have access to encryption technology
and secure connections. This means consumers can buy products online from
a range of sites with more peace of mind than ever before.
"Even as a small business when you engage in these secure transactions...
there is a whole procedure you can follow," says Travica. "It's easy and it's
affordable to anyone, really, to buy an encryption and decryption key and
to be certified. There are certifying agencies that prove you are the company
you claim to be."
Customer Info is Marketing Power
Companies will continue to gather as much information as possible about
their customers. When it comes to marketing, information is power -- the power
to sell more.
"The big thing that companies are trying to do...is gain much more detailed
information about their customers, so that they can serve them better," says
Companies know that building their business by getting new customers is
very difficult. "Building your business by taking your existing customers
and selling them more is a lot better, and the way you do that is by knowing
more about your customers," explains Richardson.
"They want to know all this detailed information so they can send you
more targeted [marketing messages]," Richardson adds. "For example, magazine
subscriptions -- if they know that I subscribe to Hunters and Bowhunters Weekly
and I also own a motorcycle, there's a 72 percent chance that I also own a
pickup truck (these numbers are hypothetical). So those [kinds of predictions]
are the things they're trying to do."
It might be that today's younger generation is open to giving their private
information to companies more willingly than past generations. Through social
media they already are giving out information, perhaps without realizing it.
This can have many unforeseen consequences.
"Young people have to be more discreet about letting information [go online],"
says Richardson. "They've got to be so careful about that on Facebook and
other social networking sites... because this lives on as screen captures
"Companies are now mining this to be able to sell people a product," Richardson
adds, "but they're also using it when they want to hire people to make decisions
about their personality."
Center for Democracy and Technology
A privacy advocacy group
Electronic Privacy Information Center (EPIC)
Offers an online guide to privacy resources
Online program endorsing the use of privacy policies
International Association of Privacy Professionals (IAPP)
Organization for privacy professionals around the world