Privacy concerns holding back e-commerce

The survey, released by Andersen Legal and Arthur Andersen last week, found that 72 of the 100 sites surveyed collect personal information, but only 51 per cent publish a privacy policy and only 28 per cent of those sites notify their users about the specific personal information collected.

The lack of appropriate online privacy measures, including security and privacy policies, has largely been blamed for the slow uptake of e-commerce in the B2C space.

Andersen Legal and Arthur Andersen recommended that a "significant amount of work" needs to be done by the private sector in order to achieve the level of protection that consumers demand on the web.

Stephen Breihl, an Arthur Andersen partner, said that privacy concerns are one of the major issues affecting the uptake of e-commerce by consumers. In fact, consumer concern over privacy issues is increasing as users become more experienced at using the internet, he said.

"The take-up of people purchasing on the internet doesn't increase with the increase in users," Breihl said. "As people become more experienced it becomes a stronger concern, rather than the issue going away." People are realising that privacy is "not that controlled" on the web at the moment, he added.

According to the survey, conducted in August, consumers have reason enough to be concerned. Only half of the e-commerce sites surveyed have a privacy policy posted on their site and only 7 per cent have an Information Practice Statement -- a disclosure about the exact practices of a particular website regarding personal information. Just over a quarter of the sites surveyed were e-commerce sites as opposed to information sites.

"E-commerce sites collect a higher proportion of personal information than other sites, and the presence of a privacy policy is of paramount importance," the survey said. "There is a need for further development in this area and it is expected that the mandatory requirements under the Privacy Bill will see this problem being rectified."

Breihl said that if Australia is going to compete in the global e-commerce market, privacy issues need to be addressed. "It's a bit of worry," he said. Australia needs to adopt the same best practice standards that are used globally, he suggested.

Andersen Legal and Arthur Andersen recommended that businesses start developing privacy plans now. While it is anticipated that the new Privacy Act for the private sector will not become effective until late next year or 2002, the survey suggested that a "significant" amount of work, including remedial training and auditing, will be required to ensure compliance.

"I think most companies will deal with it pretty quickly," Breihl said. Arthur Andersen and Arthur Legal may continue to track changes to privacy issues on the top 100 Australian sites, he added.

The top 100 sites used in the survey were compiled by Sinewave Interactive.

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