Annenberg Study Shows Americans Vulnerable To Exploitation in the Online and Offline Marketplace

They Don't Know the "Seventeen Facts American Shoppers Need to Know."

Most Americans who use the internet have little idea how vulnerable they are to abuse by online and offline marketers and how the information they provide can be used to exploit them, a new study led by Joseph Turow, Ph.D., of the University of Pennsylvania's Annenberg Public Policy Center shows.

Sixty-four percent do not know that it is legal for "an online store to charge different people different prices during the same time of day," a practice used by some companies that base their prices on what they know about a customer's buying habits. Similarly, 71 percent do not know that it is legal for an offline store to do this.

Large numbers (75%) said they believe that when a website has a privacy policy, that means the site will not share their information with other websites and companies, when in fact a privacy policy usually describes, in often murky language, how that information will be shared.

And there is widespread ignorance of what companies can do with the information they collect. Most people think that selling names and information by charities and supermarkets is impermissible--or they say they don't if it is legal--when in fact it is perfectly legal.

The study involved telephone interviews averaging 20 minutes with a national sample of 1,500 adults who said they had used the internet in the previous 30 days. Commenting on the findings, Professor Turow said it was "startling to find that 65 percent of respondents said they 'know what I have to do to protect myself from being taken advantage of by sellers on the web. Judging by their scores on the factual questions in the survey, their self-confidence is mistaken."

He warned that "As society moves further into the twenty-first century, prices that vary based on firms' information about us could become an increasing feature of the marketplace. Consumers who are not aware of how price discrimination works, of what rights they hold when it comes to companies' using knowledge about them, and of how to respond to these circumstances may find themselves consistently paying more than others for the same products. Database-driven price distinctions could spread as growing numbers of retailers use information consumers never knew they revealed to draw conclusions about their buying patterns that they would not have wanted."

The formal report on the survey (which is available on the APPC website at www.annenbergpublicpolicycenter.org/) is titled "Open to Exploitation: American Shoppers Online and Offline." It warns that most internet-using adult Americans will fall prey to marketplace manipulations even while many believe (incorrectly) that they know how to handle themselves.

The report proposes three reforms to reduce that risk:

First, the Federal Trade Commission should require websites to drop the label Privacy Policy and replace it with Using Your Information. The new designation could go far toward reversing the broad public misconception that the mere presence of a privacy policy automatically means the firm will not share the person's information with other websites and companies.

Second, U.S. school systems--from elementary through high school--must develop curricula that tightly integrate consumer education and media literacy. Paying new attention to these much-neglected subjects is critical if society is to succeed in preparing young people for the increasingly challenging twenty-first century marketplace.

Third, the government should require retailers to disclose specifically what data they have collected about individual customers as well as when and how they use those data to influence interactions with them.

The survey posed 17 true-false questions about basic laws and practices of price discrimination and behavioral targeting and about where consumers can turn for help if their marketplace information is used illegally. U.S. adults who used the internet in the past month were correct on an average of only 6.7 of them. Most did not know who is allowed to control information about them that can lead to price discrimination. Most were also incorrect in believing that the law protects them from secret forms of price discrimination offline and online. Beyond factual misunderstandings, the survey revealed that internet-using adults overwhelmingly object to behavioral targeting and price discrimination as ethically wrong.

The findings suggest that Americans' ignorance of key retail realities at a time of major marketplace changes leaves them open to economic abuse and emotional distress.

Americans' lack of knowledge can quite specifically lead to economic loss:

* 68% of American adults who have used the internet in the past month believe incorrectly that "a site such as Expedia or Orbitz that compares prices on different airlines must include the lowest airline prices."

* 49% cannot detect illegal "phishing"--the activity where crooks posing as banks send emails to consumers that ask them to click on a link wanting them to verify their account.

* 66% cannot correctly name even one of the three U.S. credit reporting agencies (Equifax, Experian, and TransUnion) that could keep them aware of their credit worthiness and whether someone is stealing their identity.

When presented with scenarios describing different types of behavioral targeting, fully 84% of internet-using adults believe that some websites analyze what people are reading, change the ads based on that reading, and even buy personal information about the readers from database companies. Almost all (89%) of those who say their supermarkets offer frequent shopper cards took the stores up on them--and in doing it gave the stores personally identifiable information about themselves. Yet most of the internet-using adults also seem to be unprepared for and unwilling to accept what retailers do with the information they get.

* 76% agree that "it would bother me to learn that other people pay less than I do for the same products."

* 64% agree that "it would bother me to learn that other people get better discount coupons than I do for the same products."

* 66% disagree that "it's OK with me if the supermarket I shop at keeps detailed records of my buying behavior."

* 87% disagree that "it's OK if an online store I use charges people different prices for the same products during the same hour."

* 72% disagree that "if a store I shop at frequently charges me lower prices than it charges other people because it wants to keep me as a customer more than it wants to keep them, that's OK."

Internet-using adult Americans do directly admit feeling vulnerable in this retail environment. Only 17% agree with the statement that "what companies know about me won't hurt me" (81% disagree), 70% disagree that "privacy policies are easy to understand," and 79% agree that "I am nervous about websites having information about me." Sadly, though, only about one out of three (35%) says he or she "trust(s) the U.S. government to protect consumers from marketers who misuse their information."

Of all characteristics in people's backgrounds, having more years of education is the best predictor of understanding basic realities about power to control information on them and the prices they pay in the online/offline marketplace. Yet even having more general schooling doesn't necessarily mean really knowing this world well. People whose formal education ended with a high school diploma know correct answers to an average of 5.6 items out of a possible 17. People with a college degree do better--7.8--but that still means they get only 45% right. Even people with graduate school or more average 8.6 correct--just 51% correct.

The survey was carried out by ICR/International Communication Research. The study was conducted by telephone from February 8 to March 14, 2005, among a nationally representative sample of 1,500 respondents who said they had used the internet within the past thirty days.

"Seventeen Facts American Shoppers Need to Know--But Don't" is the title of a supplement to the report that encourages Americans to take the 17 item test and then explains the correct answers. It is available on the Annenberg Public Policy Website, www.appcpenn.org

Seventeen Facts American Shoppers Need to Know--But Don't, according to the new Annenberg Survey

In the survey we presented seventeen correct or incorrect statements to the nationally representative sample of 1,500 adults who used the internet during the past thirty days. We asked if each statement is true or false. Correct versions of all the statements are reproduced below. The percentage that "didn't know" refers to the percentage of respondents who responded "true" or "false" incorrectly to the questionnaire version of the statement or said they didn't know whether the statement was true or false.

1. WHEN A WEBSITE HAS A PRIVACY POLICY, IT DOES NOT MEAN THE SITE WILL PROTECT YOUR PRIVACY. 75% didn't know. The purpose of privacy policies is to disclose to consumers how their information will be used by the website. This often involves sharing their personal information with other websites or companies. The presence of a privacy policy, unfortunately, does not always ensure privacy protection.

2. BY LAW, A SITE SUCH AS EXPEDIA OR ORBITZ THAT COMPARES PRICES ON DIFFERENT AIRLINES IS NOT REQUIRED TO OFFER THE LOWEST AIRLINE PRICES. 68% didn't know.

3. THE NATIONAL CREDIT REPORTING AGENCIES THAT CAN PROVIDE YOU WITH A COPY OF YOUR CREDIT REPORT ARE EQUIFAX (WWW.EQUIFAX.COM), EXPERIAN (WWW.EXPERIAN.COM), AND TRANS UNION (WWW.TRANSUNION.COM). 66% didn't know even one. Check your credit yearly to make sure you haven't become an identity theft victim.

4. WHETHER YOU LIKE IT OR NOT, YOUR BANK HAS A RIGHT TO SHARE INFORMATION ABOUT YOU WITH THE COMPANIES THAT IT OWNS. 73% didn't know. You do have a right to stop the bank from sharing information about you with outside parties. But you have to tell the bank you don't want that to happen. That's called "opting out."

5. BANKS DO NOT SEND THEIR CUSTOMERS EMAILS THAT ASK THEM TO CLICK ON A LINK WANTING THEM TO VERIFY THEIR ACCOUNT. 49% didn't know. Legitimate companies don't ask for this information via email. If you get an email or pop-up message that asks for personal or financial information, often referred to as "phishing," do not reply or click on the link in the message. If you are concerned about your account, contact the organization in the email using a telephone number you know to be genuine, or open a new internet browser session and type in the company's correct Web address. In any case, don't cut and paste the link in the message.

6. WHEN YOU GIVE MONEY TO CHARITY, BY LAW THAT CHARITY IS ALLOWED TO SELL YOUR NAME TO ANOTHER CHARITY EVEN IF YOU DON'T GIVE IT PERMISSION. 72% didn't know. If you don't want that to happen, make sure your charity won't do it.

7. WHEN YOU SUBSCRIBE TO A MAGAZINE, BY LAW THAT MAGAZINE IS ALLOWED TO SELL YOUR NAME TO ANOTHER COMPANY EVEN WITHOUT YOUR PERMISSION. 52% didn't know. If you don't like that idea, tell your magazine. Some magazines may allow you to stop them from doing that. By giving a magazine a unique variation on your name--or a fictional name--you can track who has bought your information from the magazine.

8. A VIDEO STORE IS NOT ALLOWED TO SELL INFORMATION ABOUT THE TITLES THAT YOU HAVE RENTED. 71% didn't know. It can, however, sell your name and address as someone who has rented from the store.

9. YOUR SUPERMARKET IS ALLOWED TO SELL OTHER COMPANIES INFORMATION ABOUT WHAT YOU BUY. 64% didn't know. Your frequent shopper card is a passport for your supermarket or drug store to collect enormous amounts of information about what you buy--and to give you greater or lesser discounts for products based on what they know. If that bothers you, don't use the card--or don't use it for products you want to keep really private.

10. A WEBSITE IS ALLOWED TO SHARE INFORMATION ABOUT YOU WITH AFFILIATES WITHOUT TELLING YOU THE NAMES OF THE AFFILIATES. 49% didn't know.

11. COMPANIES TODAY HAVE THE ABILITY TO FOLLOW YOUR ACTIVITY ACROSS MANY SITES ON THE WEB. 20% didn't know. These companies are often spyware firms or advertising networks. To stop them, use anti-spyware software and disable the ad-network's cookies.

12. A COMPANY CAN TELL THAT YOU HAVE OPENED ITS EMAIL EVEN IF YOU DON'T RESPOND. 28% didn't know. You may want to delete some obvious spam without opening it. Also, although using "panes" in some email programs allows you to see the beginning of the message before you open it, it may tell the sender you've actually opened the message. Don't use panes if you don't want the sender to think that.

13. MOST ONLINE MERCHANTS GIVE ME THE OPPORTUNITY TO SEE THE INFORMATION THEY GATHER ABOUT ME. 47% didn't know. Don't be misled by the assurance that the website allows you to change your information. That's almost always just the information that you gave the site. Shopping sites typically keep track of what you do on their sites and what you buy, and they don't allow you to know what they know or how they use it. If that bothers you, don't register for a site, and erase the cookies that the site puts on your machine.

14. MOST ONLINE MERCHANTS DO NOT ALLOW YOU THE OPPORTUNITY TO ERASE INFORMATION THEY HAVE GATHERED ABOUT YOU. 50% didn't know. Typically, they allow you to erase or change only the information that you yourself gave them, not the information they have gathered during your activities on the site, or bought from elsewhere.

15. IT IS LEGAL FOR AN ONLINE STORE TO CHARGE DIFFERENT PEOPLE DIFFERENT PRICES AT THE SAME TIME OF DAY. 62% didn't know. Price changes based on time and day and what stores know about you is becoming a fact of life online and offline. Sometimes we gain because of it, sometimes we lose. For reasonably expensive goods, it pays to shop around, often through comparison shopping sites. But be careful there, too.

16. IT IS LEGAL FOR AN OFFLINE STORE TO CHARGE DIFFERENT PEOPLE DIFFERENT PRICES AT THE SAME TIME OF DAY. 71% didn't know. See above.

17. THE FEDERAL TRADE COMMISSION WILL NOT CORRECT ERRORS IN CREDIT RPORTS. 76% didn't know that. Check out the Federal Trade Commission site (www.ftc.gov) for helpful consumer information.

VISIT: www.appcpenn.org



	You are here: home > web news > annenberg study shows americans vulnerable to exploitation in the online and offline marketplace
	E-mail this page Printer-friendly page	Annenberg Study Shows Americans Vulnerable To Exploitation in the Online and Offline Marketplace They Don't Know the "Seventeen Facts American Shoppers Need to Know." Most Americans who use the internet have little idea how vulnerable they are to abuse by online and offline marketers and how the information they provide can be used to exploit them, a new study led by Joseph Turow, Ph.D., of the University of Pennsylvania's Annenberg Public Policy Center shows. Sixty-four percent do not know that it is legal for "an online store to charge different people different prices during the same time of day," a practice used by some companies that base their prices on what they know about a customer's buying habits. Similarly, 71 percent do not know that it is legal for an offline store to do this. Large numbers (75%) said they believe that when a website has a privacy policy, that means the site will not share their information with other websites and companies, when in fact a privacy policy usually describes, in often murky language, how that information will be shared. And there is widespread ignorance of what companies can do with the information they collect. Most people think that selling names and information by charities and supermarkets is impermissible--or they say they don't if it is legal--when in fact it is perfectly legal. The study involved telephone interviews averaging 20 minutes with a national sample of 1,500 adults who said they had used the internet in the previous 30 days. Commenting on the findings, Professor Turow said it was "startling to find that 65 percent of respondents said they 'know what I have to do to protect myself from being taken advantage of by sellers on the web. Judging by their scores on the factual questions in the survey, their self-confidence is mistaken." He warned that "As society moves further into the twenty-first century, prices that vary based on firms' information about us could become an increasing feature of the marketplace. Consumers who are not aware of how price discrimination works, of what rights they hold when it comes to companies' using knowledge about them, and of how to respond to these circumstances may find themselves consistently paying more than others for the same products. Database-driven price distinctions could spread as growing numbers of retailers use information consumers never knew they revealed to draw conclusions about their buying patterns that they would not have wanted." The formal report on the survey (which is available on the APPC website at www.annenbergpublicpolicycenter.org/) is titled "Open to Exploitation: American Shoppers Online and Offline." It warns that most internet-using adult Americans will fall prey to marketplace manipulations even while many believe (incorrectly) that they know how to handle themselves. The report proposes three reforms to reduce that risk: First, the Federal Trade Commission should require websites to drop the label Privacy Policy and replace it with Using Your Information. The new designation could go far toward reversing the broad public misconception that the mere presence of a privacy policy automatically means the firm will not share the person's information with other websites and companies. Second, U.S. school systems--from elementary through high school--must develop curricula that tightly integrate consumer education and media literacy. Paying new attention to these much-neglected subjects is critical if society is to succeed in preparing young people for the increasingly challenging twenty-first century marketplace. Third, the government should require retailers to disclose specifically what data they have collected about individual customers as well as when and how they use those data to influence interactions with them. The survey posed 17 true-false questions about basic laws and practices of price discrimination and behavioral targeting and about where consumers can turn for help if their marketplace information is used illegally. U.S. adults who used the internet in the past month were correct on an average of only 6.7 of them. Most did not know who is allowed to control information about them that can lead to price discrimination. Most were also incorrect in believing that the law protects them from secret forms of price discrimination offline and online. Beyond factual misunderstandings, the survey revealed that internet-using adults overwhelmingly object to behavioral targeting and price discrimination as ethically wrong. The findings suggest that Americans' ignorance of key retail realities at a time of major marketplace changes leaves them open to economic abuse and emotional distress. Americans' lack of knowledge can quite specifically lead to economic loss: * 68% of American adults who have used the internet in the past month believe incorrectly that "a site such as Expedia or Orbitz that compares prices on different airlines must include the lowest airline prices." * 49% cannot detect illegal "phishing"--the activity where crooks posing as banks send emails to consumers that ask them to click on a link wanting them to verify their account. * 66% cannot correctly name even one of the three U.S. credit reporting agencies (Equifax, Experian, and TransUnion) that could keep them aware of their credit worthiness and whether someone is stealing their identity. When presented with scenarios describing different types of behavioral targeting, fully 84% of internet-using adults believe that some websites analyze what people are reading, change the ads based on that reading, and even buy personal information about the readers from database companies. Almost all (89%) of those who say their supermarkets offer frequent shopper cards took the stores up on them--and in doing it gave the stores personally identifiable information about themselves. Yet most of the internet-using adults also seem to be unprepared for and unwilling to accept what retailers do with the information they get. * 76% agree that "it would bother me to learn that other people pay less than I do for the same products." * 64% agree that "it would bother me to learn that other people get better discount coupons than I do for the same products." * 66% disagree that "it's OK with me if the supermarket I shop at keeps detailed records of my buying behavior." * 87% disagree that "it's OK if an online store I use charges people different prices for the same products during the same hour." * 72% disagree that "if a store I shop at frequently charges me lower prices than it charges other people because it wants to keep me as a customer more than it wants to keep them, that's OK." Internet-using adult Americans do directly admit feeling vulnerable in this retail environment. Only 17% agree with the statement that "what companies know about me won't hurt me" (81% disagree), 70% disagree that "privacy policies are easy to understand," and 79% agree that "I am nervous about websites having information about me." Sadly, though, only about one out of three (35%) says he or she "trust(s) the U.S. government to protect consumers from marketers who misuse their information." Of all characteristics in people's backgrounds, having more years of education is the best predictor of understanding basic realities about power to control information on them and the prices they pay in the online/offline marketplace. Yet even having more general schooling doesn't necessarily mean really knowing this world well. People whose formal education ended with a high school diploma know correct answers to an average of 5.6 items out of a possible 17. People with a college degree do better--7.8--but that still means they get only 45% right. Even people with graduate school or more average 8.6 correct--just 51% correct. The survey was carried out by ICR/International Communication Research. The study was conducted by telephone from February 8 to March 14, 2005, among a nationally representative sample of 1,500 respondents who said they had used the internet within the past thirty days. "Seventeen Facts American Shoppers Need to Know--But Don't" is the title of a supplement to the report that encourages Americans to take the 17 item test and then explains the correct answers. It is available on the Annenberg Public Policy Website, www.appcpenn.org Seventeen Facts American Shoppers Need to Know--But Don't, according to the new Annenberg Survey In the survey we presented seventeen correct or incorrect statements to the nationally representative sample of 1,500 adults who used the internet during the past thirty days. We asked if each statement is true or false. Correct versions of all the statements are reproduced below. The percentage that "didn't know" refers to the percentage of respondents who responded "true" or "false" incorrectly to the questionnaire version of the statement or said they didn't know whether the statement was true or false. 1. WHEN A WEBSITE HAS A PRIVACY POLICY, IT DOES NOT MEAN THE SITE WILL PROTECT YOUR PRIVACY. 75% didn't know. The purpose of privacy policies is to disclose to consumers how their information will be used by the website. This often involves sharing their personal information with other websites or companies. The presence of a privacy policy, unfortunately, does not always ensure privacy protection. 2. BY LAW, A SITE SUCH AS EXPEDIA OR ORBITZ THAT COMPARES PRICES ON DIFFERENT AIRLINES IS NOT REQUIRED TO OFFER THE LOWEST AIRLINE PRICES. 68% didn't know. 3. THE NATIONAL CREDIT REPORTING AGENCIES THAT CAN PROVIDE YOU WITH A COPY OF YOUR CREDIT REPORT ARE EQUIFAX (WWW.EQUIFAX.COM), EXPERIAN (WWW.EXPERIAN.COM), AND TRANS UNION (WWW.TRANSUNION.COM). 66% didn't know even one. Check your credit yearly to make sure you haven't become an identity theft victim. 4. WHETHER YOU LIKE IT OR NOT, YOUR BANK HAS A RIGHT TO SHARE INFORMATION ABOUT YOU WITH THE COMPANIES THAT IT OWNS. 73% didn't know. You do have a right to stop the bank from sharing information about you with outside parties. But you have to tell the bank you don't want that to happen. That's called "opting out." 5. BANKS DO NOT SEND THEIR CUSTOMERS EMAILS THAT ASK THEM TO CLICK ON A LINK WANTING THEM TO VERIFY THEIR ACCOUNT. 49% didn't know. Legitimate companies don't ask for this information via email. If you get an email or pop-up message that asks for personal or financial information, often referred to as "phishing," do not reply or click on the link in the message. If you are concerned about your account, contact the organization in the email using a telephone number you know to be genuine, or open a new internet browser session and type in the company's correct Web address. In any case, don't cut and paste the link in the message. 6. WHEN YOU GIVE MONEY TO CHARITY, BY LAW THAT CHARITY IS ALLOWED TO SELL YOUR NAME TO ANOTHER CHARITY EVEN IF YOU DON'T GIVE IT PERMISSION. 72% didn't know. If you don't want that to happen, make sure your charity won't do it. 7. WHEN YOU SUBSCRIBE TO A MAGAZINE, BY LAW THAT MAGAZINE IS ALLOWED TO SELL YOUR NAME TO ANOTHER COMPANY EVEN WITHOUT YOUR PERMISSION. 52% didn't know. If you don't like that idea, tell your magazine. Some magazines may allow you to stop them from doing that. By giving a magazine a unique variation on your name--or a fictional name--you can track who has bought your information from the magazine. 8. A VIDEO STORE IS NOT ALLOWED TO SELL INFORMATION ABOUT THE TITLES THAT YOU HAVE RENTED. 71% didn't know. It can, however, sell your name and address as someone who has rented from the store. 9. YOUR SUPERMARKET IS ALLOWED TO SELL OTHER COMPANIES INFORMATION ABOUT WHAT YOU BUY. 64% didn't know. Your frequent shopper card is a passport for your supermarket or drug store to collect enormous amounts of information about what you buy--and to give you greater or lesser discounts for products based on what they know. If that bothers you, don't use the card--or don't use it for products you want to keep really private. 10. A WEBSITE IS ALLOWED TO SHARE INFORMATION ABOUT YOU WITH AFFILIATES WITHOUT TELLING YOU THE NAMES OF THE AFFILIATES. 49% didn't know. 11. COMPANIES TODAY HAVE THE ABILITY TO FOLLOW YOUR ACTIVITY ACROSS MANY SITES ON THE WEB. 20% didn't know. These companies are often spyware firms or advertising networks. To stop them, use anti-spyware software and disable the ad-network's cookies. 12. A COMPANY CAN TELL THAT YOU HAVE OPENED ITS EMAIL EVEN IF YOU DON'T RESPOND. 28% didn't know. You may want to delete some obvious spam without opening it. Also, although using "panes" in some email programs allows you to see the beginning of the message before you open it, it may tell the sender you've actually opened the message. Don't use panes if you don't want the sender to think that. 13. MOST ONLINE MERCHANTS GIVE ME THE OPPORTUNITY TO SEE THE INFORMATION THEY GATHER ABOUT ME. 47% didn't know. Don't be misled by the assurance that the website allows you to change your information. That's almost always just the information that you gave the site. Shopping sites typically keep track of what you do on their sites and what you buy, and they don't allow you to know what they know or how they use it. If that bothers you, don't register for a site, and erase the cookies that the site puts on your machine. 14. MOST ONLINE MERCHANTS DO NOT ALLOW YOU THE OPPORTUNITY TO ERASE INFORMATION THEY HAVE GATHERED ABOUT YOU. 50% didn't know. Typically, they allow you to erase or change only the information that you yourself gave them, not the information they have gathered during your activities on the site, or bought from elsewhere. 15. IT IS LEGAL FOR AN ONLINE STORE TO CHARGE DIFFERENT PEOPLE DIFFERENT PRICES AT THE SAME TIME OF DAY. 62% didn't know. Price changes based on time and day and what stores know about you is becoming a fact of life online and offline. Sometimes we gain because of it, sometimes we lose. For reasonably expensive goods, it pays to shop around, often through comparison shopping sites. But be careful there, too. 16. IT IS LEGAL FOR AN OFFLINE STORE TO CHARGE DIFFERENT PEOPLE DIFFERENT PRICES AT THE SAME TIME OF DAY. 71% didn't know. See above. 17. THE FEDERAL TRADE COMMISSION WILL NOT CORRECT ERRORS IN CREDIT RPORTS. 76% didn't know that. Check out the Federal Trade Commission site (www.ftc.gov) for helpful consumer information. VISIT: www.appcpenn.org
	Latest articles in Web News Internet News Cool Tech Gadgets InfoKwik Entertainment News Mac News Why We Like the Music We Do Annenberg Study Shows Americans Vulnerable To Exploitation in the Online and Offline Marketplace A Sneak Peek Inside Digital Journal's NEW Spring 2005 Issue! Robotic bollards to take control What will they think of next? PC/MAC Support News
	Subscribe now: InfoKwik RSS news feed, plus free headlines for your site Copyright 2005. InfoKwik Professional Web Design, Marketing and Hosting All rights reserved. i