Internet security issues are bad news for e-commerce

Today’s issue of the WSJ (subscription required) has some bad news for online retailers and bankers. According to a May survey of 5,000 U.S. online consumers by research firm Gartner Inc. , more than 42% of online shoppers and 28% of people who bank online are scaling back their activity and transactions because of loss and theft of sensitive data.

In a related matter, a new bipartisan bill threatens jail time for business leaders who fail to tell consumers when they may be at risk of identity theft. In addition, businesses would not be able to require consumers to reveal their Social Security numbers in return for goods or services.

Is this too little too late?

Personally, I’m beating on the rebound.

Things will probably cool off and return to relative normalcy after some new security products are developed and implemented by online merchants.

But are we heading down the wrong road here?
What about the unintended consequence of tougher regulation of U.S. Businesses?
Let’s not forget about SOX.

Some would argue that the reactionary implementation of the Sarbanes-Oxley act has caused serious damage to the U.S. economy. Companies are delisting and staying private to avoid the enormous financial burden of compliance. Offshore incorporation makes more sense in some cases now.

I happen to think that the problem will right itself, if the government will stay out of it. Let the industry come up with the solution.
Necessity is the mother of invention, and the right invention can make someone a lot of money.
Money is a powerful motivator…

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