COMMENTARY--Signs of consumer concern about privacy are everywhere as the holiday shopping season has moved into high gear.Congress is working overtime on legislation that would give consumers new weapons to fight identity theft--including access to free credit reports and tools to prevent thieves from opening accounts in their names. Meanwhile other privacy legislation, such the California Financial Information Privacy Act, targets industries as diverse as healthcare and finance, and the trend for privacy regulation looks set to continue.
Compelling as legal mandates may be, there's a more fundamental reason to safeguard customers' privacy during the holiday retail rush: retaining and growing their business.
That view is borne out by the results of a Harris Poll survey: A whopping 83 percent of respondents said they would stop doing business with a company if they learned that it misused customer information. Moreover, it's estimated that electronic commerce would double if people had greater confidence that their privacy was protected on the Web. In fact, the lack of confidence in privacy and security outpaces ALL other concerns--including price and ease of use--in inhibiting people from buying on the Web.
What are consumers really saying? They're saying they don't trust the security of the site, and they don't trust the site to respect their privacy and not abuse or sell their personal data. That's a huge wasted opportunity--and a very clear message that businesses must be accountable to turn this situation around--consumers are demanding it.
The solution must begin with a responsible marketplace. Through business policies and practices, the IT industry has to send an unambiguous message that tells people: "You can trust us. You have choices. They will be respected. And you'll know in advance how any information that you give us will be used."
If you build relationships with customers based on trust, they will ask you to add them to mailing lists, they will ask you to recommend products from marketing partners, and they will stick by you forever.
The good news is new technologies are here that give individuals the power to prohibit or limit others from tracking their movements on the Web. For example, there's specialized software that helps businesses automate enforcement of company privacy policies.
Clearly, the information technology industry needs to continue to accelerate work in this direction. But these technologies are not the only solution. The answer lies in companies instituting strict practices and behavioral standards--and following them.
Here are some common-sense steps businesses can take to protect the privacy of consumers when they holiday shop online:
* Post a privacy statement that clearly states how personal information will be used. If information is to be used beyond the immediate processing of the transaction, it should be clearly stated. More than half of the respondents in a survey we took reported leaving a site if the privacy policy is unclear. If they don't see it--or if they don't understand it--they leave.
* Enroll in a "seal of good standing" that speaks to your commitment to act in a trustworthy way. There are also initiatives underway by like-minded groups to encourage development of privacy notices that are written in simple language and presented in uniform formats.
* Do a thorough inventory of your company to understand what you're doing with customer data and confirm that your privacy policy is being rigorously carried out throughout your operations.
* Give customers a choice about using data beyond what is required for transaction processing. Consumers will continue to embrace the Internet only to the degree that they trust those who use the technology to respect the privacy of their personal information. Equipping consumers with knowledge and choice about how their personal information is used is key to building such confidence and trust.
* Last, businesses must look for ways to improve their privacy practices. Consumer demand for privacy is increasing. Just as companies continually look to improve their products and services to meet customer demand, the same thing needs to be done with regard to privacy.
The point to keep in mind with all of these steps is that they will improve business as they reduce privacy concerns. Current ID theft legislation is prompting businesses to do the things they've been doing all along in their traditional business--improve relationships with their customers while protecting their personal information and privacy.
How many people will still hesitate to buy their Christmas gifts online because they are reluctant to enter their credit card number or e-mail address? Those fears will be reduced substantially as businesses themselves improve online security and build it into the fabric of society.
biography
Harriet Pearson was named Chief Privacy Officer for IBM in November 2000. She is responsible for guiding privacy policies and practices across the company, streamlining privacy initiatives within IBM's many business units and geographies, and furthering the company's overall efforts in the area of privacy
