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E-COMMERCE AND PRIVACY: FOR SECURITY, THE BEST DEFENSE IS A GOOD OFFENSE

Posted on November 21, 2001

      If "security" is the current buzzword of the Internet world, "privacy" is riding close on its heels. With the passing of the U.S. Patriot Act, the growing likelihood of national ID cards, and an endless number of security and privacy legislation issues in Washington, they're on everybody's agenda. But while many Americans may be willing to make some personal concessions under the guise of national security and what Dick Cheney terms our "new normalcy," it is also apparent that they are less willing to forfeit their liberties when it comes to protecting personal privacy online.

      According to the Internet research firm Cyber Dialogue, consumer privacy concerns have been costing Internet businesses about $3.4 billion dollars per year. Forrester Research puts this figure closer to a massive $15 billion annually. Whatever the number, a significant portion is coming from the hands of that ever-feared, but ubiquitous, skittish consumer: the individual who drops an online purchase at the last minute over concerns about the security of the transaction. Much of this stems from the worry that personal or financial information is in danger of being misused or accessed by other, prying eyes. As a result, many take their business elsewhere, whether it be the brick-and-mortar counterpart to the online store they abandoned, or another online competitor that clearly articulates their security and privacy policies, thereby instilling a greater level of confidence.

      In light of the increasingly restrictive Big Brother climate, it has become evident that the implementation of privacy policies for businesses is no longer a choice but a necessity- legally, as well as economically. Consumer privacy surveys taken in recent months have illustrated that the overwhelming majority of respondents believe they have lost control over how their personal information is used by businesses, and that it is also not adequately protected by law or business.

      A word to the wise: compliance should only be seen as a preliminary step. In order for businesses to retain consumers, foster trust, build brands, and ensure customer loyalty, it is necessary to get up to speed with them. One of the best ways this can be done is by adopting a clearly articulated privacy policy. Just like privacy advocacy groups abound for consumers, there are growing numbers of resources available for businesses that help develop solid privacy policies and provide policy assessments. One such group is the Online Privacy Alliance (OPA), an organization comprised of about 100 businesses and associations dedicated to nurturing consumer privacy online.

      The OPA relies on a self-governing system that goes beyond compliance with existing privacy laws. Businesses with the OPA are required to follow Alliance guidelines, such as publishing privacy policies that are clearly displayed, provide opt-out choices, allow consumers a way to lodge complaints, and maintain the security of user data. They are certified with a special seal given by independent privacy certification companies such as WebTrust, TrustE and BBBOnline and periodic reviews are held to make sure members are in compliance.

      The importance of the e-commerce business that informs visitors about their data collection policies should not be underestimated. An FTC survey conducted in early 2001 of random sites with more than 39,000 unique visitors per month found that only 20 percent had implemented the FTC's four main guidelines for fair information practice (notice, choice, access, and security). In a time where the parameters of the digital information era are reshaping themselves daily, businesses should be aware that developing solid privacy policies will not only benefit their bottom line, but their public as well.

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