E-Commerce at What Price? Privacy Protection in the Information Economy

Abstract

Customer data will be the currency that drives the growth in business-to-consumer e-commerce over the next five years. It allows web sites to tailor goods, services and content to the consumer and provides advertisers with the most predictive buying patterns of current and potential customers. Consumer fear regarding the privacy and security of their personal information however, is preventing many consumers from either accessing the Internet or engaging in electronic commerce. Privacy and security initiatives therefore need to be developed by web sites to build trust with the consumer. A survey of the top 200 most accessed web sites in Australia reveals that over 90% of web sites are not adequately informing the consumer of what personal information they are collecting, how it is to be used and what safeguards are in place to secure it. This paper explores some of the privacy and security issues such as cookies, Spam, credit card fraud, anonymity, data aggregation and consumer profiling that have emerged with the Internet and e-commerce. Australia's converging communications environment is also examined and the proposed privacy legislation for the private sector that is to be introduced later in the year is analysed.

JEL Classification: K19, K29