Academic journal article The Journal of Consumer Affairs

Consumers' Rules of Engagement in Online Information Exchanges

Academic journal article The Journal of Consumer Affairs

Consumers' Rules of Engagement in Online Information Exchanges

Article excerpt

This research reveals three perceptual themes or "rules of engagement" used by consumers when personal information is requested in online exchanges. The themes--the criticality of the exchange, felt invasion, and fair play--underlie the choice of responses from compliance to blatant falsification of information to company requests. Identified from consumers' in-depth interviews, these themes, along with the range and variations of response behaviors, reveal that consumers' motivations vary from very simple rules to more customized rules. Our findings may help firms understand consumers' interpretation of online informational requests better and identify factors that influence how consumers respond.


The exponential growth of the online marketplace and the enhanced capability of online companies to collect, store, transfer, and analyze consumer data have raised concerns about online privacy (FTC 2000). Although search and transaction data are easily collectible, acquiring visitor, shopper, and customer information is deemed by many marketers to be key to creating a competitive advantage in online environments (Andrade, Kaltcheva and Weitz 2002; Denise and Geoffrey 2002; Sijun, Beatty and Foxx 2004). Using information about consumers and their shopping habits and preferences, marketers seek to customize and personalize customer benefits to build stronger relationships (Bush, Venable and Bush 2000; Gauzente and Ranchhod 2001; Stead and Gilbert 2001). To gain this information, marketers need consumers to respond willingly to requests for personal information with honest and accurate answers.

In a cluttered marketplace, consumers would be expected to seek efficient, customized solutions to their needs. Yet some evidence indicates that large numbers of consumers deliberately falsify information in Web site exchanges (Fox 2005). Thus, it becomes vitally important to understand how consumers perceive and respond to such requests, particularly how they counterbalance the firms' desire for information with their own desire for privacy in the relationship (Carroll 2002; Charters 2002).

From a firm's perspective, the cost of not addressing this issue is quite high. According to Meister (2006), inaccurate data cost[s] the U.S. economy six hundred billion dollars annually--5% of the American GDP. "This is in real tangible costs such as unnecessary postage, printing and staff overhead" (p.1). As a result of bad information--deliberate or otherwise--Krill (2000) estimated that 75% of companies that use Consumer Relationship Management (CRM) systems are unable to create an accurate and comprehensive profile of customers, which limits their ability to provide promised personalized services. It is estimated that "more than 25 percent of critical data in Fortune 1000 companies will continue to be flawed, that is, the information will be inaccurate, incomplete or duplicated [and] three-quarters of large enterprises will make little to no progress towards improving data quality until 2010" (Gartner, Inc. 2007).

Krill (2000) estimated the average cost of data cleanup for a firm at about $1 million. Data cleanup involves making the data collected usable in form and nature and includes correcting or deleting data which is in an incorrect format and removing duplicate postings or data which is blatantly false (e.g., names like Mickey Mouse). This figure does not even cover the costs that companies may incur as a result of managing deliberately falsified data, which are harder to identify and correct. From a public policy perspective, the Federal Trade Commission (FTC), among other entities, is concerned with the collection and protection of consumer personal information. Their focus includes the implementation of privacy protection practices required of financial institutions under the Gramm-Leach-Bliley Financial Modernization Act of 1999, as well as pursuing actions against companies that do not adequately protect customer data (FTC 2007a; 2008). …

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