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COMPANIES ADDING PRIVACY OFFICERS

Posted on July 11 2000

      Move over, CEO, CIO, and COO. Your titles are passe compared to the newest position in high demand from corporate headhunters -- Chief Privacy Officer.

      With consumers increasingly concerned about their privacy and new technology able to track Internet users click by click, companies are rapidly hiring privacy officers and giving them broad powers to set policies that protect consumers from invasion and companies from public relations nightmares.

      In many cases, the privacy officers report directly to the chairman or chief executive officer. And their hiring has become a litmus test for a company's dedication to customer privacy.

      Corporate icons like American Express, Citigroup and Prudential Insurance have hired privacy officers. AT&T added one last month.

      "Privacy went from being a minor issue in most companies, to something that could threaten their basic revenue model, or make their costly merger turn to dust," said David Westin, a privacy expert who helped a congressional committee write the Privacy Act of 1974.

      Westin said that for two decades, companies failed to fully address the issue. But that changed thanks to a recent spate of lawsuits by consumers, the government alleging a loss of privacy, and high-profile publicity surrounding how easy it is to track people with technology.

      To deal with the growth, Westin has even created a training course for new privacy officers.

      Lance Hoffman, a computer science professor at George Washington University, said privacy officers are being hired from universities and promoted from government affairs and policy positions within companies.

      They are being asked to educate their company, the public and legislators about privacy, said Hoffman, head of the university's Cyberspace Policy Institute, which studies security, e-commerce and intellectual property issues.

      "It attracts people who have a knowledge of history and law," Hoffman said. "They know something about technology, and they can't get techno-dazzled by explanations that don't hold water. They appreciate what technology can do for good and for evil.

      In 1994, Shelley Harms became the executive director for public policy and privacy for Bell Atlantic, which recently became Verizon Communications after merging with GTE.

      Harms, a public policy lawyer, helped develop the company's privacy principles. She said her job was primarily teaching, though she sometimes has to take a more active role.

      For instance, she became involved in the company's reverse-directory search product, making sure that unlisted numbers couldn't be searched and customers would feel comfortable.

      "There's a lot of education that has to be done," Harms said. "Sometimes people get very zealous about their product, and they want to gather information and use it without telling the customer. But that's not what we do."

      Michael Lamb, named AT&T's privacy officer in June, said that the rise in CPOs stem from one of two reasons: damage control and prevention.

      "Some companies name a CPO because they have a problem, and some do because they don't have a problem and want to keep doing the right thing," Lamb said.

      Lamb reports to AT&T's general counsel, Jim Ciccone. "If they don't comply, I go to the CEO," Lamb said. "We will not roll out a service where we do not comply with our privacy policy."

      Privacy issues are reaching courts in growing numbers.

      On June 10/00, the Federal Trade Commission sued the now-defunct Toysmart.com Web site for attempting to sell its customer information along with the rest of its assets.

      DoubleClick, the Internet advertising firm, was sued by a consumer who alleged the company planned to merge its online database with that of a direct-mail company it bought. DoubleClick, which named a privacy officer in March, denies any imminent plans to do that.

      Streaming music provider RealNetworks overhauled its privacy policy after it was learned that the company's RealJukebox music recording and playback program was transmitting users' musical choices back to the Seattle company. RealNetworks has stopped the practice.

      Richard Purcell, Microsoft's director of corporate privacy, was named a company director in January and reports directly to Chief Operating Officer Bob Herbold. He can veto a product if it doesn't meet the company's privacy guidelines.

      "About three months ago I had a proposal come across my desk where someone wanted to ask for (the user's) age and gender as required data for a subscription for an electronic newsletter," Purcell said. "It was irrelevant for the newsletter, and I vetoed it happily."

      Privacy experts said the new efforts aren't merely risk assessments or public relations ploys. They're about protecting and retaining companies' most important asset -- customers.

      "It's a cost-effective way of meeting consumer and client demand before you get a bunch of unhappy customers," Hoffman said.

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