Internet Commerce

Background

The rapid increase in the number of Internet users and the greater availability of high-speed Internet connections has led to substantial growth in e-commerce. A sharp increase in Internet fraud and a tidal wave of unsolicited commercial e-mails (also called UCEs or spam) have followed.

Although young adults are the most likely to use the Internet, older adults have increased their adoption rates enormously, according to the Pew Research Center. In 2000, just 14 percent of people age 65 and over and 46 percent of people age 50-64 used the Internet. By 2015, 58 percent of people age 65 and over and 81 percent of people age 50-64 did so.

The Census Bureau estimates that adjusted retail e-commerce sales were $97 billion in fiscal Q2 of 2016, which represents 8.1 percent of total adjusted retail sales. Notably, adjusted e-commerce sales as a percentage of total adjusted retail sales have increased every quarter since Q2 of 2015, moving from 7.1 percent in Q2 to 7.5 percent in Q4 of 2015. Adjusted retail e-commerce sales for all quarters of 2015 totaled just over $340.7 billion.

The use of online financial services is also mushrooming. For example, the Census Bureau estimates that in 2010 the securities brokerage industry garnered $11.6 billion in Internet revenues (or 4.1 percent of total revenue in that industry). Use of and preference for online banking is also growing. A 2013 Pew study found 51 percent of all US adults (61 percent of adult Internet users) bank online. The study also found 32 percent of all US adults (35 percent of adult mobile phone users) use cell phones to bank. Banking via mobile or Internet-enabled smartphone has increased because of its perceived convenience. The Federal Reserve Board’s 2016 Consumer and Mobile Financial Services report noted that, among mobile phone owners with bank accounts, 33 percent had used mobile banking in 2013. That percentage increased to 39 percent in 2014 and 43 percent in 2015. Among smartphone owners with bank accounts, 53 percent had used their smartphones for mobile banking as of 2015.

Consumers are losing more money to Internet fraud as well. According to the Federal Bureau of Investigation (FBI) 2015 Internet Crime Report, the FBI’s Internet Crime Complaint Center recorded $1 billion in reported losses from Internet fraud. Of the 127,145 complaints reporting a loss, the median amount reported lost was $560. The average reported dollar loss was $8,421.

Spam continues to be a concern for consumers and businesses. Some have estimated that up to 90 percent of all e-mail traffic is spam, while the Symantec Corporation estimates that the global spam rate was 53 percent as of September of 2016. Estimates of the annual cost of spam as of 2012, including lost productivity, range from $20 to $50 billion annually.

Internet Commerce: Policy

Anti-spam legislation

In this policy: FederalState

Legislation on unsolicited commercial e-mail (UCE) or spam should include such consumer protections as making it unlawful to misrepresent the sender, subject, or content of e-mail; implementing do-not-spam lists; and requiring reliable contact information and opt-out systems.

UCE legislation should impose criminal penalties for violations of the law, including such practices as fraudulent transmission and routing information.

Federal legislation should not preempt states’ right to strengthen their anti-spam protections.

Regulatory options for controlling spam

In this policy: Federal

The Federal Trade Commission should make it unlawful to misrepresent the sender, subject, or content of a UCE; fail to provide reliable contact information or a reliable opt-out system; or violate a prior opt-out request.