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Commerce on the Web: Who Do You Trust?

Consumers: New services are springing up in a bid to help users separate the legitimate businesses from the scammers.


Not long after Judy Fisher geared up to market a new service for Internet users--a database to help consumers fight rip-offs by Web-based businesses--she received a demonstration of just how useful that service might be.

She got ripped off.

Fisher's Houston-based business, Web Assurance Bureau, maintains a database of consumer complaints and issues a seal of approval to businesses that pass minimum ethical standards.

While she and her partners were setting it up, she recalls wryly, they blindly accepted a Web-based vendor's assurances of a money-backed guarantee on his e-mail software. They paid the vendor $277 and promptly discovered the program was inoperable. When they tried to get him to deliver on his promise, he and his Web site had disappeared.

"It's very easy to set up a Web site that looks legitimate," Fisher says. "Anybody can get ripped off, and you need some way to check people out. You need some kind of clearinghouse to handle consumer complaints."

Fisher's story underscores how one of the purported virtues of the Internet--anonymity--can turn into a problem when the Web is being used for commerce. It's what hampers the ability of Internet users to verify the identity of other users with whom they may be corresponding or doing business.

"Anybody can create a Web page that resembles that of a Fortune 500 company for very little money," says Holly Cherico, spokeswoman for BBBOnline, a new Web venture of the Council of Better Business Bureaus. On the Internet, "the consumer is left without the traditional cues that are available in the real marketplace," where one can walk into a business and get a feel for it in person, she said.

Not only could the cool-looking Web site that sells a product or service be for a business thousands of miles away, but the business may never answer a complaint, answer the phone or even have a phone (much less a refund policy).

Online commerce is expanding rapidly, although it remains a blip compared with traditional means of buying and selling goods. This year shoppers will spend about $1.3 billion on goods bought via the Internet, and the figure is expected to reach $7 billion by 2000. Mail-order catalog sales, by contrast, will be more than $75 billion this year.

But Web commerce is growing so fast that its shortcomings have been noticed enough to start spawning solutions. A number of nonprofit groups and private companies are hoping to step into the breach to help consumers--and businesses--protect themselves from cyberscams.

On the technology side, companies are working on encryption and verification programs to improve the security of transactions and allow for the verification of the identities of users and Web sites. eTrust, a nonprofit group, is working on a model to ensure that Internet merchants disclose what they will do with the information they collect from consumers.

The Web Assurance Bureau and a slew of other companies and groups are aiming to address the more mundane issue of ethical business practices. Although they have differing criteria of what constitutes ethical practices on the Web, all hope to give consumers a level of assurance about the reputation of online businesses.

Among them is BBBOnline, which is expected to be launched this month.

Just like its real-world counterpart, BBBOnline will award its seal of approval to companies that agree to abide by a set of business practices.

These include standards for answering customer complaints, participating in the BBB's advertising self-regulation program, and submitting to binding arbitration when a dispute cannot be resolved through the company's customer service programs.

The electronic seal will be posted on the business' Web site; clicking on it will link consumers with BBBOnline, where they will be able to check the bureau's report on the company, file electronic complaints about the business and receive assistance in resolving disputes.

BBBOnline member companies will pay an annual fee for certification, which starts at $250 for small businesses and goes into the thousands for larger companies. New members will also receive a visit at their place of business from officials with a local Better Business Bureau. (The nonprofit group has 137 bureaus in the United States and Canada.)

"We were encouraged by the Federal Trade Commission to help establish some ethical guidelines for the online marketplace," says Cherico, who describes BBBOnline as an attempt by the business community to self-regulate online commerce.

BBBOnline plans to launch its service with a modest 300 members, but it hopes to have signed up as many as 3,000 by the end of the year and to double in size every year after that.

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