Cyberspace: Consumer Protection Issues

Cyberspace: The Potential for Consumers

Draft, April 12, 1996

Presented at the American Council on Consumer Interests Meeting

Thursday, March 28, Nashville, TN

A version of this paper will be published in the 1996 issue of Consumer Interests Annual

Producers and consumers increasingly view cyberspace as a source of information, a place to advertise and/or purchase goods and services, and a means of communication. This paper looks at some of the resources available to consumers and families in cyberspace, and the difficulty of accessing and evaluating the resources.

Constance Y. Kratzer
Virginia Polytechnic Institute and State University

Cyberspace is a term that currently replaces terms such as electronic super highway or information highway in the media. It is used to describe a computerized information system that can deliver limitless streams of information. The world wide computer network makes vast amounts of information accessible through the Internet or World Wide Web.

How Does the Consumer Get There?

Access to computer based information is available through commercial on-line services and through the Internet. The Internet is a world wide system linking university, government, and commercial computers. The Internet is free to individual users as it is supported by the many institutions involved (Tetzelli, 1994). Internet and commercial services differ in some types of services and information provided. There are about 2000 Web sites offering almost any product or information on any topic (Fishman, 1996). Whatever the consumer wants to know about is probably there, but how is it found? Web browsers such as Netscape help to navigate the World Wide Web. Other search tools are Yahoo, Lycos and Alta Vista (Swartz, 1996).

Who goes there?

In 1995 about 9.5 million Americans used the Internet according AIS (The American Internet Survey) (Find/SVP, 1995). The Internet Demographics Survey by Nielsen Media Research reported that there are about 24 million people in the U. S. and Canada cruising the net (Rothenburg, 1996). Exact numbers of users are difficult to determine as people belong to more than one on-line service and how internet user is defined can differ (Arthur, 1995). The AIS definition of an Internet user is limited to uses other than e-mail. Cyberspace users are more likely to be male (about 64%), under age 44, with incomes of $25,000 or more. About half of those cruising the Internet were on for first time in 1995 according to the AIS, and the average time on-line is 6.6 hours per week. Projections for 1996 are that about 15.7 million persons, or 12% of the American population will be accessing cyberspace.

What do they do there?

The Internet is used to communicate, shop for goods and services, and seek information. Electronic mail is used to communicate because it is less expensive than long distance phone calls, can be done at each party's convenience, provides a visual record of what is said, and offers opportunity for quick response. Listservs, bulletin boards, and discussion groups let consumers be in touch with others who share similar interests. In chat rooms, consumers can meet new people and exchange information and ideas.

Consumers also shop for goods and services. In the article 'Three Days in Cyberspace', the author recounts his assignment to interact with the outside world only by computer for three days. He found problems with getting food, grooming articles, and clothing. He could 'chat', e-mail home, and trace a Fed Ex letter (Whitford, 1995). In fact, he ended up e-mailing a friend to telephone and have a pizza delivered. The consumer can order airline tickets, send flowers, buy stocks and other financial products, mail order from Land's End, purchase computer software and hardware, shop at an on-line bookstore, or send personalized greeting cards (Guise, 1996; Kratzer & Folk, 1995).

On a trip to The Branch Mall (http://branch.com) sites selling flowers, tea, t-shirts, ties, eye glasses and many other items were found. Currently there is a lack of variety of items available, but the number of sites in selected areas is increasing. In some places one can order groceries on-line, but that kind of availability is still pretty limited. Many of the items found at on-line sites were more expensive than local stores, but offered the convenience of not having to leave home.

From the Financenter Home Page (http://www.financenter.com/index.html) loan rates on automobile and home purchases, and loan applications were available. Although the internet and on-line services have attracted hundreds of companies anxious to set up shop, many consumers do not yet trust the idea of ordering products and paying bills on-line. Concerns include wanting to deal with someone they know and the fear that sensitive financial information will fall into the wrong hands.

Most of the people on the Internet are not buying or selling but are trading information that's useful in their everyday lives, such as searching for old friends and relatives, organizing events, hiring employees, and swapping advice on investments (Rigdon, 1996). Educational organizations use the internet to organize classes, communicate with home bound students, and collect homework. Information on almost any topic is available from industry, government, educational sources. For instance, the Federal Trade Commission ConsumerLine (http://www.ftc.gov/index.html) offers full text of approximately 150 consumer and business publications on topics such as credit, investments, health and fitness, telemarketing, homes and real estate, products and services, and automobiles. Health and wellness information is available from a variety of sources such as The National Cancer Institute (http://www.nci.nih.gov/) and one source of nutrition information is The International Food Information Council (http://ificinfo.health.org/homepage.htm).

Almost anything you want is there if you can sift through the many sites to find it. It continues to be a time consuming process and the information and quality of goods an services must still be evaluated by the user. Access varies widely by locality. While in the town of Blacksburg, VA, 40% of the households are connected to the Internet, that is not the norm. It also is important to keep in mind that if 12% of the population has access, that means that 88% of the population does not have access to these resources.

References

Arthur, C. (1995). And the Net total is.... New Scientist, 146,(1977), 29(3).

Find/SVP, Inc. (1995). Emerging Technologies Research , http://etrg.findsvp.com/

Fishman, T.C. (1996, February). Scouting the Web, Worth, pp.86- 89.

Guise, W. (1996, January). Surfing the cybermalls. Kiplinger's Personal Finance Magazine, pp.105-112.

Kratzer, C. Y. & Folk, K. F. (1995). Consumer information of the electronic superhighway. Family Economics and Resource Management Biennial, 1995, pp.23-24.

Rigdon, J. E. (1996, March 13). Internet's No.1 use: Information Bureau, Wall Street Journal, B1,B5.

Rothenburg, R. (1966, February). Life in cyburbia. Esquire, pp. 56-63.

Schwartz, J. (1996, March). An insider's guide to the internet. Working Woman, pp. 49-53.

Tetzeli, R. (1994, March 7). The Internet and your business. Fortune, pp. 86-96.

Whitford, D. (1995). Three days in cyberspace. Inc. Technology, 4, pp.57-60.