Security Fears Holding Back Internet Sales Growth

Buying online may have taken off massively in recent years, but new research shows almost half of all Americans don't shop on the Internet due to fears their personal information will be stolen, thus sharply reducing the potential of Internet sales, according to a survey.

Almost all those surveyed believe theft and spyware are serious problems, and only 28 percent think the government is doing enough to deal with the issues. Close to three-quarters of respondents (70 percent) said new laws were needed to protect consumer privacy.

Among members of the public surveyed, 48 percent shun Internet shopping, while 97 percent think identity theft is a serious problem and 93 percent believe spyware is a serious problem. Those surveyed were also concerned about threats from unwanted "spam" e-mails.

The telephone survey was conducted for the Washington-based Cyber Security Industry Alliance, a trade group that has called on the White House to pay more attention to Internet security.

"They [security threats and attacks] are having a direct adverse effect on e-commerce," said Avivah Litan, vice president and research director at Gartner Inc, who said the survey findings were in line with her research. "People are shopping less online, and in the end the security breaches will slow down e-commerce growth."

According to a recent survey of 137 U.S. retailers, buyers spent $141.4 billion online in 2004. Online retail sales, excluding travel, totaled $89 billion, rising 23.8 percent on 2003.

Researchers expect U.S. online sales to reach $172.4 Billion this year, a 22 percent jump. Excluding travel, sales are expected to reach $109.6 billion.

The most notable growth is expected in categories with products purchased mostly by women, with sales of jewelry and luxury goods expected to grow a spectacular 31 percent.