- The Washington Times - Sunday, November 30, 2003

Many Internet users are considering curbing their online shopping this holiday season for fear of identity theft and spam, but Internet sales still are expected to reach all-time highs.

Online retailers anticipate a 20 percent boost in November and December sales compared with last year, according to Jupiter Research. But beneath those positive numbers lurks a segment of the online population wary of retailers’ ability to protect credit-card, social-security and personal-identification numbers from criminals, according to a survey to be released today.

Increasing amounts of unwanted e-mail in consumer inboxes also are souring trust in online transactions.

The online survey by NFO WorldGroup, a Greenwich, Conn., marketing research company, involved 2,500 Internet users. The survey was sponsored by TRUSTe, a San Francisco nonprofit group that promotes Internet privacy.

Nearly half of respondents said fears over how their personal information would be used will either prevent or limit their holiday purchases online. About a third said they were afraid of identity theft, credit-card theft or unwanted e-mail.

The trend was particularly bad for smaller online retailers. Nearly one-third of survey respondents said they preferred buying from a larger online retailer because they were less trusting of how a smaller retailer would handle personal information.

“Privacy fears will be the Grinch that stole Christmas for many e-tailers,” said Fran Maier, executive director of TRUSTe, in a prepared statement. “The Internet was supposed to be this great equalizer, allowing small companies to compete with big. Yet this vision will never be realized as long as consumers are uncomfortable purchasing from e-tailers that don’t put an emphasis on privacy.”

Still, privacy concerns do not appear to be a barrier to the growth of online shopping. About 63.6 million people are expected to shop online this holiday season, compared with 53.7 million last year, Jupiter reported. Analysts said most of the sales will go to larger, recognizable online retailers who have privacy statements and encryption technology. In addition, many of the most popular sites feature a logo indicating that a third party, such as TRUSTe, has vouched for the company’s record in protecting personal information.

The Federal Trade Commission said in September that more than 10 million people were victims of identity theft in the past year.

In 2002, victims of identity theft spent more than $5 billion and banks and other businesses more than $48 billion to clear their records, the FTC said.

But FTC officials said it did not know of a single case of someone who had personal information stolen while purchasing something from a retailer that had encrypted personal information.

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