Thursday, June 02, 2005

High-profile identity theft is fueling a decline in consumers' online activity

A survey of consumers suggests that confidence in online commerce may be faltering. The research indicates a noticeable dip in the number of people who bank online. I was warning of this possibility long before a string of watershed identity thefts and security breaches rocked nearly all corners of industry this year. After all, faith in the security of online transactions is the backbone of all ecommerce.

The study, conducted by Intervoice, found that 17 percent of UK respondents surveyed no longer use online banking services. The reason: fears of identity theft. It also found that 13 percent of respondents had ceased buying from online retailers. It’s easy to look at these findings and draw the logical conclusions. The computer, retail, and banking industries stand to lose millions if consumer confidence in the security of online commerce is declining as this research suggests.

Identity thefts and breaches of security continue:

-A laptop computer containing the credit card information of approximately 80,000 U.S. Department of Justice employees was stolen during early May, according to a May 31 ComputerWorld report. The incident occurred at a travel agency that the DOJ uses.

-According to a May 25 Associated Press report, a May 11 computer breach at Stanford University has attracted an FBI investigation. Thieves stole the personal data (e.g., letters of recommendation and Social Security numbers) of nearly 10,000 people. A California law, which Siciliano supports, required the school to inform potential victims.

-On May 23, ComputerWorld ran an IDG News Service report about the theft of a laptop computer that contains information (e.g., Social Security numbers) on approximately 16,500 former employees of MCI Inc., owner of the machine. According to the report, a financial analyst for the company had authorization to keep the information on the laptop, which she had left in a car parked in her home garage.

-A May 23 Associated Press story that ran in The Detroit Free Press and elsewhere reported that a hacker gained access to the computer system at Michigan’s Jackson Community College and may have stolen as many as 8,000 Social Security numbers. According to the article, the school uses Social Security numbers as default passwords. Students, who are encouraged to change their passwords, tend to use the defaults anyway.

People pay attention. They’ve heard about all the identity thefts and security breaches, much of it involving computers, that have plagued industry this year. It only makes sense that consumers would begin to avoid the circumstances necessary for ecommerce.


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