In E-Commerce We Trust … Not

Of the traditions we’re most proud of, identity theft and credit card theft will likely not make the cut.

Still, it’s getting to be a habit. Last year began with 2,500 credit card numbers being exposed at seven e-commerce sites. This year, before we could even turn one calendar page, online travel giant Travelocity inadvertently exposed thousands of its customers’ names, addresses, phone numbers and e-mail addresses.

A high ranking executive at Travelocity tried to reassure consumers, saying, “We take this privacy thing very seriously.”

“Privacy thing?” The very words chosen reveal the lack of understanding.

Bad Buzz

Apparently, mega-bookstore Barnesandnoble.com takes this “privacy thing” seriously too, after it was revealed last summer that one customer unexpectedly found himself in another customer’s account with access to all of that person’s personal information.

Soon after, four Virginia banks mistakenly revealed personal customer information to the wrong customers online.

Security breaches and system glitches — buzzwords for a New Economy gone awry, and music to the ears of all those who repeat their popular refrain: “See, I told you so. I’m not shopping on the Internet because I don’t trust it.”

In Bricks We Trust

How much time does e-commerce have before consumers simply log off? The intangibles in a business relationship determine the big three ingredients of success: loyalty, longevity and most of all, trust. Have we somehow relegated the trust factor to a file called “To Do”?

I hope not. The courtship between e-tailers and e-shoppers is walking on thin ice on any number of levels, including service issues, fulfillment and delivery debacles. Can we really afford for one minute to allow a lack of trust to fester among the consumer base?

In a word, no.

As long as customers are willing to drive to Kmart, rather than simply click onto the Kmart-backed site BlueLight.com, we’re losing the race.

Crime Watch

So how do we measure this problem?

The U.S. government reports identity theft was the single biggest consumer complaint filed on its anti-fraud Web site last year. Of the 80,000 complaints filed, 23 percent involved stolen Social Security numbers or credit card accounts. If you’re counting, that means 18,400 individual Americans fell victim to security breaches.

If your mind works in bar graphs, consider this statistic: the Social Security Administration reports that allegations of identity theft skyrocketed from 27,000 in 1998 to 62,000 in 1999. That would give identity theft the dubious distinction of being the fastest growing crime in America.

It is long past time for e-commerce merchants, Internet business leaders and the U.S. government to pool their intellectual resources and aggressively campaign for the public trust.

Campaign Trail

Europe already understands the importance of this issue. Just last week, Erkki Liikanen, commissioner of Internet issues for the European Commission, said, “The freedom of the Internet, the source of its very success, has to be preserved. The fact also is: No security, no trust, no transactions.”

Erkki wisely commented that e-commerce projections of rapid growth will be nothing more than “pie in the sky” without the public trust.

With that in mind, the Commission is putting the finishing touches on a paper on cybercrime, to be presented to the European Union Council of Ministers. Reportedly, the paper will propose the formation of a forum to raise public awareness and encourage best practices in Internet technology security.

Are you listening U.S. legislators? Are we not still proud of our status as New World innovators here in the U.S.? If so, it’s time to step up and give online consumers the security blanket they are demanding.

Merchant Sting

Of course, consumers have to play fairly, too. E-tailers are legally liable for most instances of Internet fraud and transactions disputed by online consumers.

If a consumer contacts the credit card company and says, “I never received the merchandise,” or “I never ordered the merchandise,” most often it is the e-tailer who eats the sale.

E-tailers cannot afford to take responsibility for the illicit machinations of unsavory consumers.

Online travel industry leader Expedia.com illustrated this problem last year when it reported a US$4.1 million charge against revenues for credit-card fraud. It so happens Expedia is part of a thriving online industry, and it’s backed by big daddy Microsoft. But what about the independent guy who sells widgets on the Web? How many hits can he take from crack consumers trying to beat the system?

Bottom Line

The trust issue needs to be assessed from a “nothing ventured, nothing gained” perspective by U.S. commerce.

Either the government, the online merchants, security experts and credit card companies work expeditiously to solve these problems, or shoppers will withdraw the trust that could sustain the industry for the long haul.

What do you think? Let’s talk about it.