Report: E-Biz Needs To Foster Online Privacy

Although American consumers increasingly view themselves as the "first line of defense" in the fight to safeguard personal information online, firms conducting business on the Internet need to offer stronger privacy protections, according to a new study released Tuesday by the Privacy Leadership Initiative (PLI) and Harris Interactive.

"People are telling government and industry that they want the most control and responsibility for protecting their privacy, and that they are prepared to exercise that responsibility when given the tools to do so," said John Kamp, acting executive director of the PLI, an association of chief executive officers from 15 major corporations and nine business groups.

The study found that while 45 percent of online users think business Web sites have gotten better at providing privacy notices, approximately 59 percent said companies still need to make considerable improvements in informing users what the businesses do with their personal information.

Moreover, the report said 43 percent of Internet users believe that businesses currently have no incentive to protect their privacy and that only half think consumers have an "appropriate level" of control over how their information is gathered and used.

Good Business

PLI and Harris said online firms should view the findings as an opportunity to build customer confidence and cement a long-term buying relationship because consumers are more likely to spend if they believe their privacy is safe.

"At the end of the day, good privacy is good business, and everyone can benefit from that," said Kamp.

Privacy Seal Pros and Cons

While many companies have sought to quell consumer concerns about online shopping by incorporating privacy notices and seals on their Web sites, the report said the results are mixed.

For example, the study found that such notices are "invaluable" in helping to ease user concerns over sharing their data. In fact, the report said many online users often supply personal information based on their presence alone.

On the other hand, the study found that while consumer awareness of online privacy statements is growing, fewer Internet shoppers are actually reading the fine print. As part of a similar survey conducted by the PLI and Harris last year, about 78 percent of the respondents reported doing so. This time around, that figure fell to just over two thirds.

Too Much Info

The chief reasons cited for the decline by those who rarely or never read online privacy statements included that they did not want to take the time and that they did not intend to purchase goods via the Web. Others said the notices are too lengthy and crammed with an overabundance of detail.

Further illustrating the disconnect between consumer groups that are clamoring for more stringent online protections and the seeming apathy by some buyers towards wading through privacy policies, the study said that only one quarter of users have set their computer settings to reject cookies while just 10 percent have installed software to make purchases anonymously.

Keep It Simple

The report advises that online businesses looking to bridge the gap should "dramatically simplify" privacy notices, so they will serve as a useful tool for consumers to protect their information.

"It's not enough to provide just a privacy statement," said Harris Interactive senior vice president David Krane.

"For any organization interested in growing their business both online and offline, they must give consumers options and tools to help safeguard their privacy, as well as consumer-friendly messages that don't require a law degree or translator to follow," he added. "There is certainly room for improvement in this area."

Fear Factors

While privacy advocates have long clamored for stronger regulatory oversight to protect personal information, the study concluded that almost one quarter of consumers are still most concerned about security or hackers invading their privacy.

Other prevalent fears cited by Internet users surveyed for the report include the surveillance of their online behavior, an erosion of overall privacy rights, credit card or financial fraud, and the sale or transfer of personal data to third parties.

Balancing Act

Despite these concerns, more than half of online consumers told PLI and Harris that they believe the benefits of shopping online outweigh the use and collection of private data. In fact, the groups found that Web users are most willing to share their information for product discounts.

"Concerns don't always translate to behavior, which means privacy is an issue that continues to evolve," said Krane.

"Certainly, familiarity with the medium helps," he added, "but I think most people would be willing to share more basic information with offline and online companies in exchange for goods and services if they were assured their information was being collected and used appropriately.

In conducting the study, PLI and Harris surveyed nearly 3,2000 consumers on their privacy experiences and expectations.