by Robert J. Wagman & William C. Gillis
Fraud scares everyone, consumers want protection from fraud, and retailers fear that fraud will scare consumers away. That’s why Piyush Gupta, CEO and president of auction site LiquidPrice.com, is leading an initiative among auction sites to adopt business principles outlined in a bill of rights for Internet users.
Gupta’s proposed bill calls for clear and accurate terms of sale, full disclosure of all costs, and low-cost insurance for all transactions over the Internet. Gupta hopes that adoption of these measures will guard against “people associating the Web with fraud,” he says. “If fraud becomes widespread, people might stay away from the Web.”
According to the Internet Fraud Complaint Center (www.ifccfbi.gov), operated jointly by the FBI and the National White Collar Crime Center, Internet fraud is the fastest growing class of fraud in this country. Of the 6,087 complaints received by the IFCC between May and November 2000, 86.4 percent involved auction or e-commerce fraud, and only 4.8 percent involved credit card fraud.
According to Greg Meyers, adjunct professor of marketing at Wharton University and a consultant with Qwest Interactive, businesses must ensure that customers are comfortable making purchases on their Web site. “Small-business sites should be more concerned with credibility than credit-card theft,” Meyers says. He recommends sites acquire a “seal of approval,” such as the “VeriSign Secure Site” seal, and display it prominently on their site.
In addition to fraud, Gupta’s bill addresses consumer privacy, a growing public concern. San Jose, Calif.-based TRUSTe.org certifies Web sites that meet its consumer-privacy standards. A TRUSTe-certified site must disclose what personal information is being gathered and how the information will be used.
Both TRUSTe and Gupta’s bill of rights call for strict “opt-in” processes to protect consumers’ information. Under an opt-in standard, customer permission is required before a company can share a customer’s data with anyone else. Currently, most sites use an “opt-out” standard, which usually means a user must “un-check” a box if he or she does not want personal information passed on. Dave Steer, TRUSTe’s spokesperson, says that the opt-in principle is important in building trust.
Gupta has sent the bill of rights to over 50 auction sites, and has received some enthusiastic feedback, along with some indifference. “The Web is so new that the norms aren’t set,” Gupta says. “We are trying to make the norms.”
Consumer advocate and Green Party candidate Ralph Nader is backing Gupta’s efforts. At a March press conference in Santa Monica, Calif., Nader declared, “Consumers deserve at least as much protection when they buy over the Internet as in any transaction.” Steer says Nader’s involvement will help increase consumer awareness. “Nader’s just the guy,” he says, “to take the issue to the next step where mainstream consumers are aware of it.”
