According to a recent study by the research group The Conference Board, growing security concerns are causing Internet users to alter their online behavior. The study found that more than 13 percent of all Internet users say they or members of their households have been victims of identity theft.
According to the study, 41 percent of consumers are purchasing less merchandise online. A major reason for this decline is the fear that financial institutions are not protecting consumer information adequately.
“Trust has been broken on more than one level,” said Lynn Franco, director of The Conference Board's Consumer Research Center. “It's not only the transaction; it is the storing and transporting of personal information that is making people afraid to shop online.”
The study revealed that while the number of households shopping online is not decreasing, the number of purchases per household is decreasing. In order for online retailers to recapture the momentum, they need to address these security issues and regain consumer trust, Franco said.
The study also revealed that 54 percent of online consumers say they are more concerned today about the security of their personal information on the Internet than they were a year ago. That concern is making them more proactive in their computing behavior.
“Nearly 70 percent of online shoppers have security software on their PCs. Consumers are very concerned about any type of financial transaction, purchasing or banking,” said Franco.
Christina's article has admirable balance, and she goes on to point out:
Despite these concerns, online retailing continues to grow in double digits, and online retailers are making profits. According to a recent study conducted by Forrester, online sales in 2004 rose 23.8 percent to over $141 billion. The report predicts that online retail sales will hit $172 billion by the end of 2005.
She also quotes Gartner's Litan as saying:
“One percent to 3 percent is not that big as e-commerce is growing on a 10-to-20-percent forecast,” said Litan.
The growth of e-Commerce and the growth of internet identity fraud are two conflicting and opposed dynamics. But it's wrong to think they are unconnected. The growth in e-commerce will inevitably fuel the growth of internet fraud, which studies estimate is already growing at 20 percent per month (not per year…)
Unchecked, the intertwining of these tendencies lead to something we should think of as an identity meltdown. I don't think it will then be possible to just “switch off the set” and return to normalcy. We will need to go through a reconstruction period, in which a safe and reliable infrastructure is put in place.
Think forward from today. How will we know we have passed from the period of identity breaches into identity meltdown? If we start the reconstruction today, can we avert such a meltdown? And if so, how much time do we have?