Online Privacy

If a customer wishes to buy a product online, personal information must be disclosed in order to complete the transaction.  The business has a legitimate reason for requesting information such as a name, address, email address, and credit card number, and can offer the customer a real product in return.  The customer can use the internet to research the product and purchase from a business not located locally.  While this scenario seems like a good deal for everyone involved, the significant issue of privacy has not been addressed. The behavior of online businesses towards consumer privacy might be significant enough to discourage or encourage consumers from purchasing anything online.

Online privacy is a complex issue.  Online businesses and consumers have a conflict of interests regarding the manner in which personal information is collected and distributed.  “When associated with consumer activities that take place in the arena of the electronic marketplace, privacy usually refers to personal information and the invasion of privacy is usually interpreted as the unauthorized collection, disclosure, or other use of personal information as a direct result of electronic commerce transaction” (Wang).  People naturally want to control how and when their personal information is distributed.  The internet is a very interactive environment, so businesses view the data collected as a valuable asset.  These databases can be compiled and sold to third parties.  Therefore businesses want to have control over how and when a person’s personal information is distributed.  Most people would prefer not to have their email address sold to a spammer.  Yet, to a business, this situation means more money, at least for the short term.

Because information is so valuable, why wait for a customer to come a business in order to collect it?  A new breed of programs, collectively called malware, has been developed to actively collect the information from the internet user.  “Although there is no official breakdown, we can divide malware into several broad categories of malware: adware, spyware, hijackers, toolbars, and dialers” (Baratz).  While not all malware is designed to collect information, many of the programs perform several functions.  Malware generally discloses the fact that it will perform some or all of these functions as part of the licensing agreement.  Unfortunately, most people skip reading the agreement and are unaware that these programs represent a threat to their privacy.

To further complicate matters, two more parties have become involved.  Criminals have become adept at tricking people into divulging personal information through a scheme called phishing. In an effort to resolve the conflict of interests between consumers and businesses, and catch the criminals, the governments have formulated laws and must devote resources towards enforcing the laws.  Of course, the internet transcends national boundaries, so the laws could become the subject of international treaties.  Enforcing laws across international boundaries is a slow process, and people are suffering from identity theft are unlikely to recover their money.

Identity theft is one of the major threats to online privacy.  “According to a Gartner Group study from May of this year [2004], at least 1.8 million consumers have been tricked by phishing attacks into revealing sensitive information -- and the majority of that 1.8 million occurred within the year prior to that report” (Granneman).  Phishing is costing everyone a lot of money.  “In all, the study [by Gartner's Avivah Litan] concluded that about $1.2 billion has been stolen from U.S. financial institutions through phishing attacks” (Sullivan).  In fact, so much money is being lost; banks are shying away from insuring money lost to phishing schemes!

Privacy is a major concern for people who use the internet.  Personal information is important and needs to be protected.  The internet transcends national boundaries, making law enforcement difficult.  The goal of every business is to make money, but short term gains through the use of malware and spam might cause consumers to shy away from the internet.  “A major impediment against full-scale integration of the Internet marketplace with modern business is the lack of confidence Internet consumers have in the newly developed marketing machinery” (Wang). 

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