Abstract
Buying online is still perceived as risky. A key strategy of online marketers to increase consumer trust in online ordering is to display privacy and security seals on their web sites. Although research indicates that these Internet seals do not necessarily mean better safety for online consumers, findings of several other studies demonstrated that these safety cues do influence consumer responses. The goal of this chapter is to provide the reader with an overview of findings regarding the persuasiveness of Internet seals and to reflect upon possible explanatory mechanisms for these effects. Future research directions and managerial implications for e-business are provided.
TopBackground
Many web stores display third party Internet seals on their homepage to inform consumers about their adherence to rules regarding privacy and security. Well-known examples include Verisign, Trustwave, BBBOnline, Trust.e, Validated Site, and Trust Guard. Third party Internet seals serve to promote a sense of safety among online consumers. A great body of research has shown that considerations regarding safety and risk are an impediment for shopping in an online environment (e.g., Jarvenpaa, Tractinsky, & Vitale, 2000; Miyazaki & Fernandez, 2001; Pavlou, 2003; Ranganathan & Ganapathy, 2002). Most of the risks that consumers experience on the Internet can be categorized as privacy risks and security risks. Privacy risks pertain to attempts of the online retailer to collect, use and distribute information about consumers without prior permission or even awareness of the consumer. Security risks refer to either the security of the Internet itself, or to concerns about the competence and integrity of the online retailer (Miyazaki & Fernandez, 2001).
Despite the inherent insecurity of online shopping, consumer spending on the Internet is rapidly growing. Apparently, consumers have established ways to find places that they consider safe. To establish whether a web store is safe, consumers typically do not study the privacy regulations or the conditions of use (Milne & Culnan, 2004). Instead, they rely on online cues that provide information about website privacy and security and that can be processed in a relatively effortless manner. In information economics, cues that inform the other party about characteristics such as quality or safety that cannot easily be observed, and that are relevant to a sale or an agreement are called signals (Spence, 1973). Signaling theory assumes a rational consumer that takes into account that for a firm it would be economically ill-advised to send signals that imply product or service qualities that cannot be substantiated.
Key Terms in this Chapter
Online consumer trust: The online consumer’s general belief or expectancy that a specific online firm and/or third party can be relied upon.
Third party Internet seals: Signals sent to consumers to inform them that the online firm adheres to certain standards regarding security and /or privacy.
Privacy risk: The risk that information about online consumers collected for commercial purposes is not treated in a fair and responsible manner.
Security risk: The risk deriving from either the competence or integrity of an online firm or from the Internet itself that the storage or transmission of information about online consumers is not secure.