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August 3, 1997

Buyer beware:
E-commerce has pitfalls

By Timothy C. Barmann

Remember Ira Magaziner?

The former Rhode Islander was the chief designer of President Clinton's health-care plan, which went over like an umbrella sale in the middle of the desert.

Magaziner has been focused elsewhere for the past two years, and his latest project was to oversee the drafting of the administration's policy regarding the Internet.

The policy, which President Clinton officially unveiled last month, covered everything from content on the Internet to sales tax on electronic purchases. (The document can be viewed at http://www.iitf.nist.gov/eleccomm/ecomm.htm.)

The guiding principal behind the work, unlike Magaziner's health care plan debacle, was that government should take a hands-off approach to the Internet whenever possible. The idea is that electronic commerce, or "e-commerce" as it's called, will blossom without government control and taxes.

E-commerce is coming along slowly but surely, but it still has a ways to go, if some recent experiences I had are any measure.

Over the past few weeks, I purchased some stock, ordered a T-shirt and bought some computer accessories through an online auction -- all without ever talking to a human. I found that, for the most part, I enjoyed the convenience of online shopping. But I was disappointed in the service from one of the Web sites and disturbed by a major lapse in its security.

The stock purchase I made was through an online broker called E*Trade. I had opened an account with the company, based in Palo Alto, Calif., a couple years ago through CompuServe, before E*Trade had a Web site. Using E*Trade back then was cumbersome, and the Web site (http://www.etrade.com/) is a big improvement.

Buying the stock was really easy and cheap -- $15 -- compared to using a human broker. To use E*Trade, you first have to send the company a check, which they deposit in an interest-bearing account. Once they have your money, you're ready.

Making the trade was simple. A form asks for the symbol of the stock and how many shares you want. You can set a limit for how much you will pay and how long the order is good for. I chose to buy at market value and the Web site told me after a couple more clicks that the order had been placed.

I was left wondering however, at what price the shares would be purchased. Price quotes at E*Trade and other online brokers are delayed for 15 or 20 minutes. I wasn't sure if my purchase was made at the delayed price being quoted or at the actual current price. I never got an answer and, had I been speaking with a human broker, I obviously would have been able to ask.

It would have been nice if E*Trade had sent an immediate confirmation of the stock trade by E-mail; instead it was sent by U.S. mail, and I received it a few days later.

Buying computer accessories from Onsale.com was decidedly more fun. Onsale is one of the best-known of dozens of auction sites that have popped up on the Web.

The site (http://www.onsale.com) lets you participate in live auctions for computers, peripherals, and electronic equipment. Some of the items are new, but many are extra inventory items, refurbished units and slightly outdated equipment.

The auctions often begin in the late afternoon or early evening and end the next day in the morning or early afternoon. There are five auctions a week.

If you see an item you want, you can bid on it by entering your name, address, your bid, and, of course, by giving your credit card number. Subsequent bids only require you use an account number and password, which you get the first time you register on the Web site.

Onsale does a good job at re-creating the feeling of being at an auction. Immediately after you make a bid, your initials and your bidding price are posted in a list of other bidders. You can immediately see where you fall in the ranks.

I bid on a hard drive that looked like it was going for a good price. The description said it was a new item, and they were selling more than 100 of them. A few hours before the auction was to end, I was sent E-mail with the subject "You've been outbid!" By replying to that message with your account number and new bid, you can get right back into the bidding, which I did.

In two separate auctions, I bought a hard drive and a video card. The hard drive was new, but it came with no instructions or software. It arrived in a sealed foil bag. I was able to get some instructions from the hard drive company's Web site, and since I had installed a hard drive before, it wasn't difficult to get it running. I paid about three-quarters of the price of the same drive that is being sold through a mail-order company.

The bottom line is that you can often find good deals through Onsale.com, but be prepared to do some extra leg work to install some of their items. And keep checking your E-mail as the auction ends. A word of caution: buying stuff from this site can be addicting.

The most disturbing experience with e-commerce came after I ordered a T-shirt for a friend from the ESPN online store (http://www.espn.com/ and click on ZoneStore).

Ordering was easy enough -- just pick a T-shirt size and enter a credit card number. The order was supposed to be shipped the next day. It wasn't.

And three days later, PC World magazine reported that someone had somehow captured the credit card numbers of 2,400 people from the computers of Starwave, the company behind the ESPN's online store. The intruder also managed to break into another Starwave site, NBA.com.

What's worse, customers whose credit card numbers were captured were actually notified by an anonymous E-mail message that their credit card numbers had been stolen and were posted publicly on the Web, according to the PC World report.

Jennifer Yazzolino, a spokeswoman for the Bellevue, Wash.-based Starwave, said the credit-card number theft was done by someone with inside knowledge of the company's computers and passwords. It wasn't the work of a hacker breaking through their security systems, she said.

All 2,400 customers who were potentially affected by the theft were notified by Starwave by E-mail and by a regular letter.

Yazzolino said that since I had not received such notification, my credit-card number was not among those stolen. But she suggested I contact my credit-card issuer as a precaution.

Starwave is working with the FBI to identify the suspect, she said, and the company has tightened security.

Maybe so, but its service is lagging. After three weeks, my friend's T-shirt still hasn't been delivered. A representative from the company that fills orders for ESPN's online store said she couldn't find my order in their computer system, even though I had a received an E-mail message confirming my order. Another representative told me the shirt I ordered was out of stock.

The credit card incident has left me more reluctant to offer my credit card to online vendors. But the ease in which I can spend my money by typing a few keys may cause me to hide my wallet before I sit down at my PC.

Computer calendar

Wednesday -- Two Apple product managers from the company's Cupertino, Calif. headquarters will demonstrate Mac OS8 and the company's forthcoming operating system, Rhapsody, at a meeting of the Rhode Island Macintosh Users Group. The meeting is at 7:30 p.m. at the Davies Career and Technical High School, Lincoln. For directions and more information, see the RIMUG's Web site at http://www.saturn.net/rimug/page/thismonth.html or contact Juan Mariscal at 253-7702, or by e-mail at juanm@brainiac.com.

Timothy C. Barmann is a Journal-Bulletin staff writer. His column runs every other Sunday on the Computers and Technology page. Send him comments via e-mail at tim@cybertalk.com or U.S. mail, c/o the Journal-Bulletin, 75 Fountain St., Providence, R.I. 02902.