Why pay when it's 'free'?

Consumers disgruntled by a fee increase for certain services will often switch to a competitor or cancel.

Many, however, are turning to another option: stealing. A host of businesses that facilitate consumer theft have sprung up in recent years, say experts, largely in an effort to attract consumers infuriated by what they perceive to be unfair prices.

The businesses primarily sell products that allow consumers to circumvent monthly bills for services such as cable and satellite television. Others offer information on how to avoid paying for home utilities and telephone bills.

Combined with consumers' widespread practice of distributing copyrighted music and movies over the Internet, the growing prominence of these "fraud services" has given rise to an increasingly pressing question: Are consumers growing more comfortable with committing theft?

Several experts believe the answer is yes, even though one result is an increase in fees for consumers who do pay their bills. "Many people, particularly young adults, don't see it as a right or wrong anymore, but in terms of what is most convenient for them," says Paul Witt, a communications professor at the University of Texas at Arlington.

The evolution of technology that often gives its users a veil of anonymity is largely responsible for changing consumers' standards, say experts.

But people are not committing fraud simply because technology has made it possible. Their acts, say observers, are partly a defense of long-held expectations. For more than 50 years, Americans have been conditioned to expect entertainment services, in particular, that are cheap or free.

Many believe that services are now priced so unfairly that theft has become a justifiable form of civil disobedience.

"People have gotten so used to getting things for free [that] they probably should be out there paying for, they've come to believe that that's the way it should be," says Bob Kruger, vice president of enforcement for the Washington-based Business Software Alliance (BSA).

Theft of cable and other mainstream services is not new, but the degree to which ordinary consumers are stealing appears to be growing, according to observers within several industries.

"These are people who wouldn't necessarily try to do this on [a regular basis]," says Ellen Silver, product manager of CyberSource, a financial transaction consultancy in Mountain View, Calif. "This is not their regular lifestyle."

The number of consumers stealing satellite TV service, for example, is expected to grow from 400,000 in 2000 to 5.4 million in 2009, says the Carmel Group, an electronics research group in Carmel, Calif.

The utilities, software, and telecommunications industries all report rising incidents of theft. In each of the latter two, the theft results in losses of $10 billion a year.

Each of these industries blames the surge, in part, on businesses, primarily Internet-based, that instruct an audience of lay thieves in the art of stealing a particular service, or sell products that help accomplish the task.

Cable-descrambler boxes that are engineered to pick up every cable channel available in a given region are widely available online for about $300. Other sites sell similar software for satellite services for $150.

These businesses protect themselves against prosecution by posting disclaimers on their websites that say customers must report the use of these products to the local cable or satellite company to avoid breaking the law.

But the intent of the sites, many experts maintain, is clearly to sell products that abet consumer theft.

"You could theoretically buy a black box to enhance an old TV, but no one still uses them for that," says Marc Smith, spokesperson for the National Cable & Telecommunications Association in Washington.

People who would not normally consider stealing are doing so now partly because technology makes it so easy - and makes it seem so harmless.

Many end up stealing largely because of their instinct to get as much as they can out of technology. But increasingly, that causes them to run afoul of ethics.

One example: networks that give consumers wireless Internet in their home. Such "Wi-Fi" networks are so expansive they can sometimes be shared with a neighbor - saving him the cost of broadband Web access - without significantly slowing connections speeds.

Many people, particularly young adults, often assume that firms would not allow technology to accomplish a task if it weren't an acceptable use. "The technology is moving fast, and the legal system and educational system are not keeping up with it," says Mr. Kruger.

That is one reason the BSA - an organization known for doggedly pursuing prosecution of those who illegally distribute copyrighted software - recently launched a softer agenda: publishing piracy-education material in "Weekly Reader" school magazines.

But studies show that even adults minimize the significance of stealing services as opposed to tangible products.

In several surveys over the past decade, University of Mississippi marketing professor Scott Vitell found that half of all consumers believe that it is OK to steal a service that can be replicated elsewhere - like cable programming or digital music. Yet nearly all of those people said stealing a can of soda, for example, was wrong. "There's some notion that if the original is still available, you haven't done anything wrong [by copying it]," says Mr. Vitell.

Consumers' failure to recognize the value of intellectual property, as opposed to a tangible product, is rooted in historical precedent.

"For most of the 20th century ... consumers grew accustomed to receiving [TV and radio] broadcasts for free, once having made the initial investment in the receiver," says Michael Rappa, a professor of technology management at North Carolina State University.

The same model was strengthened in the minds of younger consumers when most businesses on the Internet chose not to charge for access to their websites.

Consumers have also been given broad rights to save entertainment for future viewing. The most important case: Sony versus Universal City Studios, a 1984 decision that allowed consumers to record TV programming onto VHS cassettes without paying an added fee.

Because of this model for access, efforts by companies to charge a fee for entertainment have consistently been met with stiff resistance by many people.

Consumer psychologists call this response "psychological reactance." Whenever consumers' freedoms are challenged, the theory goes, they will go to great lengths to overcome the loss.

"It is particularly true of Americans that whenever you try to take something away from them, they will do whatever they can to restore that freedom," says Larry Compeau, director of the Society for Consumer Psychology.

"When you begin to feel it's your right that [these services] should be free, if they start charging, maybe you don't feel any guilt in trying to evade that," says Vitell, the marketing professor.

The cable industry, for example, loses about $6.8 billion to consumer theft each year. Many experts cite rate increases as a key reason. Cable rates nationwide have jumped 45 percent in the past six years, according to Consumers Union.

Rather than sue their own customers, businesses must adapt their own practices so they better fit consumer psychology, experts suggest. "Folks who sell intellectual property have to adopt models that make accessing entertainment feel virtually free," says Michael Carroll, a law professor at Villanova University.

One example: Charging customers a one-time subscription fee of $5 to download digital music. Under that scenario, music distributors will be more able to replicate the feeling people expect of unlimited access, without penalties.