Cyberspace: Consumer Protection Issues

Cyberspace: Consumer Protection Issues

Cyberspace: The Potential for Consumers

Draft, April 12, 1996

Presented at the American Council on Consumer Interests Meeting

Thursday, March 28, Nashville, TN

A version of this paper will be published in the 1996 issue of Consumer Interests Annual

Producers and consumers increasingly view cyberspace as a
source of information, a place to advertise and/or purchase goods
and services, and a means of communication. This paper looks
at some of the resources available to consumers and families in
cyberspace, and the difficulty of accessing and evaluating the

Constance Y. Kratzer

Virginia Polytechnic Institute and State University

Cyberspace is a term that currently replaces terms such as
electronic super highway or information highway in the media.
It is used to describe a computerized information system that can
deliver limitless streams of information. The world wide
computer network makes vast amounts of information accessible
through the Internet or World Wide Web.

How Does the Consumer Get There?

Access to computer based information is available through
commercial on-line services and through the Internet. The Internet
is a world wide system linking university, government, and
commercial computers. The Internet is free to individual users as
it is supported by the many institutions involved (Tetzelli, 1994).
Internet and commercial services differ in some types of services
and information provided. There are about 2000 Web sites offering
almost any product or information on any topic (Fishman, 1996).
Whatever the consumer wants to know about is probably there, but
how is it found? Web browsers such as Netscape help to navigate
the World Wide Web. Other search tools are Yahoo, Lycos and
Alta Vista (Swartz, 1996).

Who goes there?

In 1995 about 9.5 million Americans used the Internet according
AIS (The American Internet Survey) (Find/SVP, 1995). The
Internet Demographics Survey by Nielsen Media Research reported
that there are about 24 million people in the U. S. and Canada
cruising the net (Rothenburg, 1996). Exact numbers of users are
difficult to determine as people belong to more than one on-line
service and how internet user is defined can differ (Arthur, 1995).
The AIS definition of an Internet user is limited to uses other than
e-mail. Cyberspace users are more likely to be male (about 64%),
under age 44, with incomes of $25,000 or more. About half of
those cruising the Internet were on for first time in 1995 according
to the AIS, and the average time on-line is 6.6 hours per week.
Projections for 1996 are that about 15.7 million persons, or 12% of
the American population will be accessing cyberspace.

What do they do there?

The Internet is used to communicate, shop for goods and services,
and seek information. Electronic mail is used to communicate
because it is less expensive than long distance phone calls, can be
done at each party’s convenience, provides a visual record of what
is said, and offers opportunity for quick response. Listservs,
bulletin boards, and discussion groups let consumers be in touch
with others who share similar interests. In chat rooms, consumers
can meet new people and exchange information and ideas.

Consumers also shop for goods and services. In the article ‘Three
Days in Cyberspace’, the author recounts his assignment to interact
with the outside world only by computer for three days. He found
problems with getting food, grooming articles, and clothing. He
could ‘chat’, e-mail home, and trace a Fed Ex letter (Whitford,
1995). In fact, he ended up e-mailing a friend to telephone and
have a pizza delivered. The consumer can order airline tickets,
send flowers, buy stocks and other financial products, mail order
from Land’s End, purchase computer software and hardware, shop
at an on-line bookstore, or send personalized greeting cards (Guise,
1996; Kratzer & Folk, 1995).

On a trip to The Branch Mall ( sites selling
flowers, tea, t-shirts, ties, eye glasses and many other items were
found. Currently there is a lack of variety of items available, but
the number of sites in selected areas is increasing. In some places
one can order groceries on-line, but that kind of availability is still
pretty limited. Many of the items found at on-line sites were more
expensive than local stores, but offered the convenience of not
having to leave home.

From the Financenter Home Page
( loan rates on automobile
and home purchases, and loan applications were available.
Although the internet and on-line services have attracted hundreds
of companies anxious to set up shop, many consumers do not yet
trust the idea of ordering products and paying bills on-line.
Concerns include wanting to deal with someone they know and the
fear that sensitive financial information will fall into the wrong

Most of the people on the Internet are not buying or selling but are
trading information that’s useful in their everyday lives, such as
searching for old friends and relatives, organizing events, hiring
employees, and swapping advice on investments (Rigdon, 1996).
Educational organizations use the internet to organize classes,
communicate with home bound students, and collect homework.
Information on almost any topic is available from industry,
government, educational sources. For instance, the Federal Trade
Commission ConsumerLine
( offers
full text of approximately 150 consumer and business publications
on topics such as credit, investments, health and fitness,
telemarketing, homes and real estate, products and services, and
automobiles. Health and wellness information is available from a
variety of sources such as The National Cancer Institute
( and one source of nutrition information
is The International Food Information Council

Almost anything you want is there if you can sift through the many
sites to find it. It continues to be a time consuming process and
the information and quality of goods an services must still be
evaluated by the user. Access varies widely by locality. While in
the town of Blacksburg, VA, 40% of the households are connected
to the Internet, that is not the norm. It also is important to keep in
mind that if 12% of the population has access, that means that 88%
of the population does not have access to these resources.


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