Tracking Online Behavior: Three in Four Consumers Say Using Their Information for Fraud Detection Purposes Is 'Okay'
May 9, 2011 8:21 am
RISMEDIA, May 9, 2011-ThreatMetrix , a provider of cloud-based fraud prevention solutions that do not require personally identifiable information (PII), recently announced that a joint study with the Ponemon Institute revealed the majority of consumers are comfortable with online behavioral tracking for fraud prevention purposes, but remain hesitant around advertising and promotional purposes. The results are outlined in a report, "Consumers' Reaction to Online Fraud."
Seventy-four percent of consumers expressed some level of concern about online advertisers collecting and using their information for future promotional activity. Survey results showed that half of respondents, however, reported that it is acceptable to use information about their online behavior as long as it's used to detect potential fraudsters. The rest of survey respondents were divided in their sentiments; 24 percent said they don't think behavioral targeting in any form is appropriate, whereas 26 percent said it is okay for online businesses to use their information to either send them ads or monitor potential fraudsters.
When asked about the extent of obtaining consent to use their online behavioral information for fraud detection, only 16 percent said advance consent was necessary for each transaction. One third said consent was not necessary at all, while the majority (36 percent) said consent only once in advance is sufficient.
The Issue of Behavioral Advertising
As a hotly contested topic, in mid-April Senators John McCain and John Kerry introduced a privacy bill focused on the security and management of personal information. In it, they outline how companies must reveal when they are collecting consumer information, in what capacity it will be used and keep that data safe from hackers. This comes in response to proposed FTC legislation in late 2010, which was initiated in response to the privacy implications arising out of behavioral advertising.
"Such legislation could have unintended consequences for those engaged in cyber security efforts," says Reed Taussig, president and CEO of ThreatMetrix. "While the recognition of the unique role of data collection for fraud prevention was recognized by the FTC staff, there will likely be tradeoffs between privacy and security."
"Businesses must be sensitive to using personal information for targeting," adds Taussig. "Consumers are generally not comfortable about receiving ads and promotions, based on our survey results, but are more open to companies using their information to verify their identity. It's just a balance of using the information appropriately, or risk losing their trust and loyalty."
The majority of consumers (70 percent) reported that if they were assured their personal information was not collected when used for fraud detection purposes, they were comfortable with an online business authenticating their identity through a digital fingerprint. Another 22 percent said they were unsure.
"Online businesses need to move toward other authentication techniques that evolve beyond using personally identifiable information, but can still prevent fraudsters from being alerted about the security precautions a company is taking," says Taussig.
When it comes to disclosing the use of a digital fingerprint, three in four consumers indicated that disclosure is not necessary, or only if such disclosure does not reduce the business's ability to fight cybercrime.
On top of that, 82 percent of consumers indicated that they would expect an online business to use alternative methods to verify their identify if they were unable to match their computer's digital fingerprint to their security system.
The research also looked at consumer sentiment about fraud prevention across the banking, social media and Web 2.0 industries and mobile channel. For more information about the findings, download a copy of the report at http://info.threatmetrix.com/ConsumerSurveyOnlineFraud2011.html.
For more information visit www.ponemon.org.
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