Privacy Concerns Curb Online Commerce, Communication

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Concern about online security and privacy are leading Americans to curtail online activity, the United States National Telecommunications and Information Administration reported last week.

More than 41,000 households with at least one Internet user in July responded to several privacy and security questions the U.S. Census Bureau posed for the NTIA.

Eighty-four percent of those households named at least one online privacy and security concern, and 40 percent mentioned at least two.

Sixty-three percent were concerned about identity theft. Other concerns included credit card or banking fraud, data collection or tracking by online services, loss of control over personal data, data collection or tracking by government, and threats to personal safety.

Privacy or security concerns deterred 45 percent of online households from conducting financial transactions or buying goods or services online, from posting on social networks, or from expressing opinions on controversial or political issues online during the year prior to the survey. Thirty percent refrained from at least two of those activities.

Online households were more likely to refrain from activities related to their privacy or security concerns, the NTIA found.

For example, 35 percent of households concerned about identity theft refrained from conducting financial transactions online during the year prior to the survey, compared to 18 percent of other online households. Thirty-three percent of online households concerned about credit card or banking fraud didn't make purchases over the Internet compared to 21 percent of other online households.

Fear about government data collection dissuaded 29 percent of online households from expressing controversial or political opinions online, compared to 16 percent of other households.

"Policymakers need to develop a better understanding of mistrust in the privacy and security of the Internet and the resulting chilling effects," said Rafi Goldberg, policy analyst in the NTIA's Office of Policy Analysis and Development. "In addition to being a problem of great concern to many Americans, privacy and security issues may reduce economic activity and hamper the free exchange of ideas online."

Older people are more likely to refrain from going online, as they "tend to be far more concerned with this kind of thing than younger users," observed Rob Enderle, principal analyst at the Enderle Group.

That said, "one large breach might scare a massive number of people off the Web if it's damaging enough," he told the E-Commerce Times.

It's unclear how big a breach needs to be to have a measurable impact on the economy.

In all, nearly 4 billion records have been lost or stolen since 2013, according to the Breach Level Index.

The Society of Worldwide Interbank Financial Telecommunications, SWIFT, which serves more than 11,000 banking and securities organizations worldwide, recently warned members that its software might have been breached.

That incident "is yet another example of the ever-increasing challenge of preventing unauthorized access to repositories of sensitive data," HPE Security's George Rice, senior director, payments, told the E-Commerce Times.

A young Russian hacker earlier this month offered to sell data from more than 272 million stolen email accounts, including some from users of Yahoo's Google's and Microsoft's systems, for just US$1.

Yet e-commerce appears to be going strong. For example, Amazon's net revenues in Q1 2016 exceeded $29 billion, compared with about $23 billion in the first quarter of 2015.

However, Amazon's figures "don't tell you what the revenues would have been had these concerns not be evident, nor what will happen to these revenues in the face of a major breach," noted Enderle.

By now, "the everyday users who are going to let [news about breaches] scare them into good security practices have already done so," remarked Jonathan Sander, vice president at Lieberman Software.

"To see 272 million records going for $1 means the prices for our data are falling, which may be seen as good news," he told the E-Commerce Times. "As prices get lower and the skill needed to grab the data gets higher, maybe we'll see market forces fighting the bad guys for us."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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