Americans Are Too Afraid To Shop Online

Danielle Beurteaux

According to a new report released by the National Telecommunications and Information Administration (part of the U.S. Department of Commerce), Americans are very concerned about online security and privacy. And that’s a problem for e-commerce.

Based on Census Data collected in July 2015 from 41,000 households with at least one Internet user, the study reports that 25% of households with four devices have experienced a security problem, and that figure goes up to 31% for those who have five or more devices. Using a mobile data plan out of the home? Then you might be part of the 22% who had a security problem.

When those surveyed were asked about their biggest online concerns, 63% came up with identity theft, the top response, which increased to 70% among those who had already had a security problem. Next came 45% who were concerned about bank or credit card fraud. The third biggest concern – data collection by online services – was over 20 percentage points lower. What’s really interesting about these responses is that they weren’t pre-written or multiple choice – respondents were free to come up with whatever concerned them most.

“Interviewers did not suggest possible answers when asking this question, and respondents were free to give multiple answers or to say that they had no concerns. Despite the lack of prompting, 84% of online households named at least one concern they had about online privacy and security risks, and 40% cited at least two different concerns,” wrote policy analyst Rafi Goldberg.

And those concerns are translating to online behaviors. For instance, 29% of households surveyed were wary of conducting financial transactions online, and that figure increased to 40% for those who’ve already had a security breach. Similarly, 26% of all households don’t buy online because of security concerns, and 35% of households with security breach experiences don’t partake in e-commerce.

This isn’t great news for two reasons: The world is moving online and this could create a group of people with limited online engagement.

The second is that a number of that size is probably giving nightmares to anyone involved in online commerce, from banking to selling.

One solution to increasing consumers’ comfort level with online activity is a bill introduced last spring, the Consumer Privacy Bill of Rights. The goal of the bill is “[t]o establish baseline protections for individual privacy in the commercial arena,” i.e. give consumers more information and control over their personal information. But when the first draft of the bill was released, some privacy advocates claimed it didn’t go far enough to offer real protections. On the other hand, some said it goes too far and would be detrimental to business. (Also, it probably won’t be passed, but at least it’s a start).

Meanwhile, according to the 2016 BDO Retail RiskFactor Report, an annual report on risk in the retail landscape, found that online security is at the forefront of retailers’ minds. “Privacy Concerns Related to Security Breach” actually tied for first place this year, with “General Economic Conditions.” Consider that only two years ago, in 2014, security breaches came in eighth place.

The next challenge for e-commerce will be to create an environment of trust that maintains a level of personalization. Because everyone knows that a security breach is bad for business.

See how businesses are balancing customers’ desire for a more personalized experience with their concerns about privacy and security in Live Businesses Deliver a Personal Customer Experience Without Losing Trust.

Danielle Beurteaux

About Danielle Beurteaux

Danielle Beurteaux is a New York–based writer who covers business, technology, and philanthropy. Her work has appeared in The New York Times and on Popular Mechanics, CNN, and Institutional Investor's Alpha, among other outlets.