Auction sites: Hotbed of Internet fraud?

ITworld.com |  Business

The bulk of electronic crimes committed in the U.S. last year related to Internet auction sites and affected people between the ages of 20 and 40 -- the so-called Generation X-ers and Baby Boomers, according to a study released Tuesday by New York market research company eMarketer.com.

In the 87-page study entitled, "The ePrivacy and Security Report," eMarketer pulls together research carried out over the course of 2000 by sources including the FBI, the Federal Trade Commission and IBM, as well as analyst companies including Forrester Research and Jupiter Communications.

Given the popularity of auction Web sites such as eBay's, which attracts 16 million users per month, it's not surprising that 87% of online fraud in 2000 was estimated to be related to such auctions, according to Rob Janes, eMarketer analyst. The average cost per victim of 'Net fraud was pretty high, on the order of $600, he said.

"The natural assumption was that old people and kids get taken advantage of by scam artists," Janes said. "But it's really the people who like to shop online a great deal. They should proceed with more caution."

An area of grave concern is the willingness of some children to share information online about themselves and their parents in return for goods and services, Janes said. He referred to research from Annenberg Public Policy Center, which discovered that 75% of children in a 2000 survey would trade personal data for free gifts.

"It's quite an issue," Janes said. "It cuts to the core of letting kids go online." Although there are laws in place to guard against Web sites obtaining personal data from children, the research indicates that "not everyone's paying attention" to the legal niceties, he said.

Overall, the research that eMarketer gathered indicates that users "don't feel they have control" over the information they give out to Web sites, Janes said. There's still a lot of work to be done with regard to educating users about how to manage online data security and understanding the privacy statements put out by Web site operators, he said.

A paradox exists today in the area of Web site personalization, according to Janes. "People worry about losing private information, but they're willing to give it up if it'll make their lives easier," he said. After all, online shopping is all about convenience. "If it's not convenient, the 'Net loses its purpose," he said.

According to eMarketer's own estimates, this year the number of active U.S. Internet users aged 14 years and above is set to rise to 46% of the U.S. population-up from 40% of the U.S. population in 2000.

Like other researchers, the company predicts that business-to-consumer revenue will decline as a proportion of e-commerce revenue, predicting it will account for 19% of total e-commerce revenue in 2001, down from last year's 23%.

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