Many Company Web Sites Don't Provide Ample Assurance to E-Shoppers, According to UB School of Management Study

BUFFALO, N.Y. -- Companies with transactional Web sites aren't providing consumers with enough assurances about the privacy, security and business integrity of the sites, according to a study by researchers from the University at Buffalo School of Management.

As a result, some companies may be losing customers concerned about Internet fraud, theft of credit-card information or a company's ability to follow through on its promises, says H.R. Rao, UB professor of management science and systems and co-author of the study, published in the June issue of IEEE IT Professional.

"We were surprised by the results," Rao said of the study, which reviewed the Web sites of 100 Fortune 1000 companies. "Independent polls have shown that many consumers think Internet shopping is risky, yet many companies don't seem interested in addressing this concern on their Web sites.

"Assurance seals are a relatively inexpensive way for companies to gain the trust of consumers," he added, "so it's surprising that many companies are not making this investment."

In the study, Rao and co-researchers Natarajan Sivasailam and Dan Jong Kim, graduate students in the UB School of Management, reviewed the Web sites of 100 companies from four industry sectors: computers and office equipment, general merchandisers, specialty retailers and apparel retailers. Of these 100 companies, 72 had Web sites that allowed consumers to buy products online.

The researchers checked the 72 sites for the presence of assurance seals of approval, which indicate the company hired a neutral third party -- such as WebTrust, TRUSTe or Better Business Bureau Online -- to certify that its Web site provides consumers with protection in three areas: security (the safeguarding of proprietary and personal data), privacy (confidential processing of consumer preferences and data) and business integrity (truthful marketing and reliable product fulfillment.)

They found that fewer than half the companies in the computers and office equipment, general merchandise, and apparel sectors had assurance seals on their Web sites. The biggest offender was the apparel industry (companies included Gap, Lands' End and Nordstrom), where just one of 11 company Web sites surveyed had an assurance seal.

Specialty retailers (companies included Amazon, Home Depot and Zales), however, had more assurance seals than the other three industry sectors combined, suggesting that specialty retailers have a more customer friendly approach to e-commerce than do companies from the other sectors.

In the study, "business integrity" was the least common assurance seal, showing up on just eight company Web sites. According to Rao, companies should start to pay particular attention to assurance in this area to offset growing consumer mistrust of U.S. business, stoked by several high-profile business scandals currently in the news.

"Consumers may need more assurance that the firm will do what it says it will do, and that it will support and stand behind its products and services," Rao said.

The study also showed that many computer retailers had privacy seals on their Web sites, but few had security seals. This suggests that these companies are aware of the consumers' need for privacy assurance, but feel their own security measures provide ample protection to consumers, Rao said.