Discussion and Future Research Directions

In an age when threats to privacy are a topic of constant discussion, it is important for marketers and public policy makers alike to understand consumer concerns about this subject. Privacy issues have been discussed intensely in the media, prompted largely by anecdotal scare stories about privacy invasion and identity theft. This has encouraged a flurry of legislative activity. On the flip side, Internet usage is growing substantially. These phenomena raise the question: what aspects of online privacy are people most concerned about, and how do they deal with these concerns? Much of the published research has used a survey approach to ascertain levels of privacy concern and the behavioral responses to these threats. In an attempt to study reactions of different demographic segments of the population to online privacy concerns and invasions, we used a grounded theory approach where six focus groups were used to generate data. The primary focus of this chapter has been to delineate the differences between age and gender groups, and identify coping strategies used by consumers when they are online. The key insights from the study are outlined in Table 10-2.

In summary, when confronted with the loss of personal privacy, focus group participants adopted a variety of coping strategies ranging from risk avoidance to risk acceptance. These strategies clearly corresponded to the individual level of self-perceived technological competence. People who had low levels of comfort and SPTC were also those with the greatest levels of concern for their privacy (Figure 10-1). It turns out that in our sample, most of these people were non-student women - both older and younger . (However, this does not provide sufficient foundation to say that there is a gender difference in SPTC. The gender differences observed in our focus groups may be an artifact of our sample, which consisted of women who spent far less time on the Internet, and therefore did not have as much online experience as the others.) Avoidance , denial, and transference of responsibility were some of the coping strategies adopted by people with low SPTC. These coping strategies result in limiting and/or restricting online usage. These respondents were also the ones who clamored for more outside intervention in the form of government regulation.

Consumers with higher SPTC were cognizant of their risk exposure, and exercised greater caution in their online dealings. However, they did not reduce their online activity. The coping strategies exhibited by these people included an acceptance of the risk of being online. The result of this acceptance is a greater emphasis on personal responsibility about privacy - which includes measures such as being careful about giving out information, reading privacy policies, using third party evaluations of Web sites, and some use of protective software. These coping strategies and behaviors were more typical of respondents who exhibited high levels of objective knowledge in addition to high levels of SPTC. High SPTC was also displayed by respondents in our student sample. However, they seemed to be less cautious in their online transactions, partly because they felt they did not have enough financial exposure to be worried about it, and partly because of a (youth-induced) sense of invulnerability.

The level of SPTC appears to be partly influenced by the extent of experience and familiarity the consumer has with the online medium. Experience and familiarity is determined not only by the number of logged hours, but also by the use of multiple functions. This is consistent with previous research which has shown that familiarity with the medium can help reduce privacy concerns (Miyazaki and Fernandez, 2001). SPTC is also affected by third-party influences, including the media.

Implications for Research on Privacy Concerns

The research on privacy concerns has focused primarily on defining the construct, and on examining action-oriented outcomes such as falsification of information, use of multiple e-mail addresses, etc. (Cranor, Reagle and Ackerman, 2001). Our research suggests that consumers use multiple behavioral strategies to resolve their concerns regarding privacy invasion. Additionally, we have shown the level of SPTC may be a key moderator of the relationship between consumer characteristics, perceived control and level of privacy concern. In her typology of Internet users, Sheehan (2002) identified four groups of consumers with differing levels of privacy concern, ranging from very high to unconcerned. The results of our study indicate that SPTC may be a key differentiator between these groups, accounting for the difference in levels of privacy concern. Future research needs to define and measure SPTC and empirically verify its role in determining concern for privacy.

Implications for Public Policy and E-Tailers

Participants in our focus groups indicated a reliance on third-party ratings of Web sites. People with lower SPTC relied on very visible signs (like the lock sign), while people with higher SPTC read some parts of the privacy policies in addition to looking for the ratings. However, consumers - particularly those with low SPTC - were not very clear about what these third-party seals of approval ensured. Miyazaki and Krishnamurthy (2000) have argued that participation in seal programs by licensees is inconsistent and that seal program sponsors do not necessarily regulate licensees . Evidently, there is room for regulation of independent seals, and education of consumers on the promise held out by these seals. It is in the interests of the e-tailer to educate the consumer about any third- party evaluations they may participate in. All of these actions can only help to increase the consumer's trust in the e-tailer or Web site, which in turn can alleviate privacy concerns.

Our research suggests that familiarity and experience leading to higher SPTC can actually make users more vigilant and careful. What this really argues for is a well-informed consumer. One way that consumers become well-informed is through education. Several focus group participants pointed to the usefulness of talks by the local sheriff's office at neighborhood block parties on the issue of credit card fraud. Electronic retailers and marketers interested in developing customer relationship management programs that require consumers to give up personal information should invest in consumer education programs, not for philanthropic reasons, but as a form of enlightened self-interest. Our research suggests that better-informed consumers are not just more likely to transact business online, they are also less likely to blame marketers solely for the unintended consequences of technology adoption.