D A T A D I G E S T PUBLIC POLICY INSTITUTE PPI UNSOLICITED COMMERCIAL (SPAM) AND OLDER PERSONS ONLINE
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1 PPI PUBLIC POLICY INSTITUTE UNSOLICITED COMMERCIAL (SPAM) AND OLDER PERSONS ONLINE D A T A D I G E S T INTRODUCTION Older Persons Online An increasing number of older persons are online users. In 2002, there were 16.6 million online users age 55 and older. 1 It is estimated that by 2007, this number will grow to 36 million, and represent over one-half (51%) of persons 55 and older (Figure 1). Users, Ages 55+ (millions) Figure 1 Growth in Online Users Age 55 and Older Source: Jupiter Research. (2003). Online Behavior and Demographics Report. In 2002, older persons accounted for 11 percent of all online users. By 2007, the proportion of older online users is estimated to increase to 17 percent and account for almost one-fourth of all online retail spending. 2 Growth and Cost of Unsolicited Commercial Growth. Worldwide, 14 to 15 billion unsolicited commercial s (UCE), or spam, 3 are sent annually. 4 One large online 1 Jupiter Research. (2003). Online Behavior and Demographics Report. Findings are an analysis of two previously collected datasets: Jupiter Internet Population Model (older online users 55 and older) and Jupiter Internet Shopping Model (retail spending of persons 50 and older). 2 Ibid. 3 For a comprehensive overview of the history of spam, see Sorkin, D. (2001). Technical and Legal Approaches to provider reported a one-year increase from 650 million to 2,400 million (Figure 2). Recent estimates report that UCE now accounts for approximately one-half of all traffic. 5 Millions of UCEs Figure 2 Growth in UCE 3rd Quarter nd Quarter Q3 (02) Q4 (02) Q1 (03) Q2 (03) Source: America Online, as cited in Consumer Reports (August 2003). Cost of UCE. Employers, online providers, and online users all bear the cost of UCE through use of equipment, loss of time, and expenditures on anti-spam devices. The total cost to U.S. businesses of UCE in 2003 is estimated to be $10 billion, 6 with Unsolicited Electronic Mail. 35 U.S.F. Law Review Fallows, D. (2003). Spam: How It Is Hurting and Degrading Life on the Internet. The PEW Foundation. 5 FTC Spam Forum. April 30-May 2, Washington, DC. 6 Ferris Research. (2003). Retrieved September 15, 2003 from the World Wide Web: A study by Nucleus Research estimated the total cost to be $87 billion. Key study findings: employees spent an average of 6.5 minutes per day, managing an average of 13 messages per day. These findings were used for calculating national estimates: 6.5 minutes/day divided by 480 minutes/work day = 1.4% lost productivity/ employee/ year. 1.4% x 2,080 hours x $30/ hour= $874/ employee. $874 employees x 100 million workers = $87 billion in the United States. Nucleus Research. (2003). Spam: The Silent ROI Killer. Retrieved October 9, 2003 from the World Wide Web: AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94
2 worldwide cost estimates at $20.5 billion. 7 In contrast, the costs to UCE senders are nominal. It is estimated that UCE senders spend as little as cent per , 8 and that only one in 100,000 UCE recipients needs to respond for the spam to be profitable. 9 UCE Fraud. In addition to the costs resulting from the sheer quantity of UCE, fraud associated with spam affects both consumers and legitimate online businesses. In 2001, consumers lost $700 million to online fraud. 10 A recent industry study found that nearly two-thirds (63%) of consumers reported that they have received fake or spoofed from a trusted brand. 11 The National Consumer s League Internet Fraud Watch received 36,802 complaints in 2002, more than double the 15,864 filed in In addition, a recent study by the Federal Trade Commission (FTC) found the following: 13 Nearly one-half (44%) of spam contained false information in one or both of the From 7 Radicati Group Report. (January 2003). Spam Control: Problems and Opportunities. 8 The New York Times. (July 28, 2003). Diverging Estimates of the Costs of Spam. 9 Caldwell, C. (June 2003). You ve got spam. The Weekly Standard. The article also states that the primary cost, the list of targeted names, can be purchased for as low as $500 per million names. 10 Federal Bureau of Investigation.(January 2002). IFCC 2001 Internet Fraud Report. 11 eprivacy Group and Ponemon Institute. (2003) Consumer Spam Study. 12 National Consumer League. Retrieved August 30, 2003 from the World Wide Web: Top five online complaints: online auctions (90%); general merchandise sales (5%); Nigerian money offers (4%); computer equipment and software (0.5%); and Internet access services (0.4%). 13 Federal Trade Commission. (April 30, 2003). False Claims in Spam. A Report by the FTC s Division of Marketing Practices. The FTC took significant steps to account for biases in the dataset, but nonetheless, results should be interpreted as a snapshot of spam, as viewed through random samples of three datasets available to FTC staff. or Subject line. Of spam with false information in the From line (33%), 46 percent suggested a personal relationship between the sender and the recipient. Of spam with false information in the Subject line (22%), 42 percent misrepresented that the sender had a personal or business relationship with the recipient. Over one-third (34%) of adult spam messages contained false information in the subject line. METHODOLOGY This data digest presents results from a national telephone survey of 1,018 persons age 50 and older who reported using a personal account at least four times a week. 14 Respondents were asked about their attitudes toward UCE, actions taken to avoid UCE (for example, purchasing filtering devices, changing accounts), and beliefs about possible solutions. FINDINGS Use of the Internet Persons age 50 and older with a personal account reported using this account an average of 7½ hours a week; approximately one-fourth (26%) reported using their accounts at least ten hours a week. Ninety percent of respondents reported accessing their personal account at home, while 10 percent do so at work and less than 1 percent at the library. Eighty-one percent of respondents reported that they had made a purchase using their personal account. o Purchasers spent an average of $1,548 each; eleven percent spent at least $3,000. o Sixteen percent of purchasers reported 14 The study was conducted for AARP by Marketing and Research Resources, Inc. in August AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94
3 purchasing something they learned about through UCE. Seventeen percent of respondents reported receiving at least 50 s a day, while nearly one-half (49%) received ten to 49 s a day. Nearly one-third (31%) of respondents reported that at least 75 percent of their s were UCE (Figure 3); nearly one in five (16%) respondents reported that at least 90 percent of their s were UCE; 7 percent reported zero percent UCE (Figure 3) % UCE Figure 3 Percent of All s Considered UCE 31% 31% >74% UCE Way to See New Products 4% Example of Free Market 11% Figure 4 What Best Describes UCE for You? Don't Know 2% Invades My Privacy 43% Irritating 40% When asked how bothersome UCE is by specific business categories, more than one-third of respondents reported most categories as extremely or very bothersome the exceptions being travel and advanced sale notices (Figure 5). 1-24% UCE 29% 7% Don't Know 0% UCE Attitudes Toward UCE Eighty-five percent of respondents reported that UCE invades privacy (45%) or is irritating (40%), while 4 percent described UCE as a way to see new products (Figure 4). Advanced Sale Notices Figure 5 How Bothersome Are UCEs by Business Category Travel Info Surveys Stocks/Quotes Religious Political Offensive/Adult Health Products Durable Goods Dating Services Charities Banking Astrology 33% 41% 43% 48% 43% 48% 45% 39% 48% 61% 30% 67% 84% Percent of Respondents Extremely Bothersome Very Bothersome AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94 PAGE 3
4 Actions Taken by Older Online Users in Response to UCE More than one in five (21%) respondents reported giving up or changing their addresses to avoid UCE. When asked what they do with UCE, more than four out of five (82%) respondents reported that they delete it without opening it. (Figure 6). Figure 6 What Do You Do With UCE? 82% Delete It Without Opening 5% Open It to Click Unsubscribe Option 4% Open It Out of Curiosity 3% Open It to Find Out Who It Is From 3% Other 2% Do Nothing and Ignore It 0% 50% 100% Over one-half (54%) use filtering devices for UCE. o Of those who use filtering devices, onethird (33%) reported spending money to do so. What Older Online Users Think Should be Done Figure 7 shows that approximately four of five respondents strongly supported pornographic identifiers, Do-Not-Spam lists, accurate return addresses, and clear subject headers requirements. Only 6 percent responded that UCE should continue as it is and not be further restricted. Pornographic Identifiers Consumer's Responsibility Do-Not-Spam List UCE 'Mailing Charge' Nothing/Continue As Is Accurate Return Address Clear Subject Identifier Figure 7 What Should Be Done About UCEs 6% 27% 46% 76% 84% 82% 78% 0% 25% 50% 75% 100% Strongly Agree More than nine of ten respondents (93%) reported that they would be very or somewhat likely to sign up, if a Do-Not-Spam registry existed (Figure 8). Figure 8 Would You Sign Up for a Do-Not-Spam List? Very Likely 74% Somewhat Likely 19% Not Likely at All 5% Not Very Likely 3% When asked which business categories they would want covered under a Do-Not-Spam list, respondents reported 11 of the 13 business categories shown in Figure 9 more than 70 percent of the time; 80 percent of respondents reported all UCE should be covered under such a list. Travel (65%) and advanced sale notices (50%) were reported less than 70 percent of the time. AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94 PAGE 4
5 Figure 9 Which Business Categories Should Be Covered by Do-Not-Spam Advanced Sale Notices Astrology Travel Info Banking Dating Services Charities Religious Political Health Products Durable Goods Stocks/Quotes Offensive Surveys All UCE 50% 88% 65% 77% 89% 74% 77% 80% 75% 71% 76% 91% 72% 80% State Law Requirements Thirty-five states have passed laws against unsolicited These laws have generally required UCE to include such features as: An accurate subject header An identifier (ADV for advertising, for example) in the subject header Routing information (that is, how the was delivered to online users from the original sender) An accurate and functional return address so that online users can remove their address from future UCEs. Delaware has an opt-in rule (that is, users should receive UCE only if they sign up to do so). The state of Washington maintains an Internet registry where citizens who do not want UCE can enter their Washington state addresses; approximately 30,000 addresses appear on the registry. A recently passed California law 16 includes opt-in for consumers, allows legal actions by consumers and Internet service providers (ISPs), and fines offenders up to $1,000 per . There is much debate as to the effectiveness and enforceability of state law. For example, even though several state laws require ADV identifiers, a recent FTC report found that only 2 percent of UCE included ADV in the subject header. 17 In addition, discussions of legal challenges to the California law began immediately upon its passage. Moreover, legal suits have been filed in Missouri. While the attorney general s office in the state of Washington has successfully prosecuted four cases against spammers, the international nature of the business and the fact that most addresses do not include a mailing address are among the challenges facing states in protecting citizens. SUMMARY/DIRECTIONS FOR THE FUTURE This study found that older online users: Use personal accounts frequently, often purchasing products over the Internet, Find UCE irritating or an invasion of their privacy, Want most business categories to be covered by Do-Not-Spam laws, and Undertake some actions to deter UCE, such as using filtering devices and changing addresses, but still want protections against UCE, such as return addresses, identifiers for offensive , subject identifiers, and Do-Not-Spam registries. 15 Retrieved July 24, 2003 from the World Wide Web: http// 16 Chapter 487. Effective January 1, It should be noted that the FTC did not determine how many of the analyzed spam were in states with ADV requirements. AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94 PAGE 5
6 In 2002, older persons accounted for 11 percent of online users, while accounting for 18 percent of online spending. 18 By 2007, the share of online retail spending by persons 55 and older will increase to 25 percent, or nearly $26 billion, up from $7 billion in UCE may diminish these projected increases in online retail spending. Costs associated with managing spam are rising exponentially in both time and money for businesses, employers, and consumers. In addition, privacy and fraud concerns associated with spam are reducing the confidence of some online purchasers in the Internet. There is no UCE silver bullet and solutions must be pursued from many directions technological, legal, and consumer action. According to the FTC, legislation must 1) enhance the ability to find the person sending the spam messages, 2) deal with how to punish the person sending the UCE, 3) clarify criminal authority, and 4) determine what standards will govern non-deceptive UCE. 19 Policymakers, businesses, and online users need to continue to discuss such policy solutions that facilitate fair and honest trade on the Internet, and maximize the potential power of the use of the Internet as a means of commerce and communication for older persons. 18 Jupiter Research. (2003). Online Behavior and Demographics Report. 19 Federal Trade Commission (FTC). Remarks by T. Muris, Chair, at the FTC and the Future Development of U.S. Consumer Protection Policy Summit. Aspen, CO. August 19, Retrieved October 9, 2003 from the World Wide Web: Written by Sharon Hermanson, November E Street NW, Washington, DC The author would like to thank Curt Davies, AARP Knowledge Management, for his contributions to this report AARP Reprint with permission only. AARP PUBLIC POLICY INSTITUTE DATA DIGEST NUMBER 94 PAGE 6
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