Internet
InternetOne of the most important advances in the rapidly
developing world of electronic commerce is the
ability of companies to develop personalized
relationships with their customers.
Personalization empowers companies to better
understand their customers’ wants and desires and
improve customer service by tailoring offerings to
the unique needs of individuals . At the same
time, this has become a subject of hot controversy
because the technology involves the extensive
collection and use of personal data. Many, if not
most, online shoppers and surfers are not aware of
the extent of how much and what kind of info can
be gathered about a person, even someone who is
just visiting and not shopping or signing up for
anything. Through the use of the “cookie”
technology, a person’s movement through the Web
can be tracked to provide information. Using
cookies a website assigns each individual a unique
identifier (but not the actual identity), so that
the he may be recognized in subsequent visits to
the site. On each return visit, the site can call
up user-specific information, which could include
the consumer’s preferences or interests, as
indicated by documents the consumer accessed in
prior visits or items the consumer clicked on
while in the site. Websites can also collect
information about consumers through hidden
electronic navigational software that captures
information about site visits, including web pages
visited and information downloaded, the types of
browser used, and the referring websites’ Internet
addresses. The result is that a website about
gardening that Jane Doe that could sell not only
her name to mail-order companies, but also the
fact that she spent a lot of time one Saturday
night last month reading about how to fertilize
roses. More disturbing scenarios along the same
lines could be imagined.However, although concern
about privacy and security has long been the
biggest issue with online shoppers¾particularly
with the sanctity of their identification-related
information¾a majority do not mind their behavior
being watched if it allows their shopping
experience to be customized. According to the 1999
Personalized Marketing and Privacy on the Net:
What Consumers Want survey conducted by the
non-profit research firm Privacy and American
Business, 61 percent of the 474 Internet users
surveyed said that they would be positive toward
receiving banner ads tailored to their personal
interests rather than receiving random ads. This
represents about 56 million adult users interested
in such personalization. In addition, 68 percent
of the users also said that they would provide
personal information in order to receive tailored
banner ads, on the condition that notice and
opt-out are provided .The study seems to back the
e-commerce firms who are watching online behavior
to provide customized shopping experiences, and
not privacy advocates who say that this practice
is an invasion of privacy. It is the purpose for
gathering the information, it would seem, that is
the key to drawing the line between acceptable
personalization and invasion of privacy. This is
why it is important to many shoppers that a site
have a privacy policy that explains what
information is gathered and how it is being used,
before they relinquish their information. However,
according to the 1999 Georgetown Internet Privacy
Policy Survey, 94% of the top 100 websites post
privacy policies, and 66% of the overall websites
post privacy policies . These figures sound
reassuring but the exact definition of the privacy
policies in themselves remains to be questioned.
The 1998 Federal Trade Commission report on
Internet privacy, “Privacy Online: A Report to
Congress” outlined five criteria by which a
commercial website can be said to have a truly
comprehensive privacy policy. Known as the “Fair
Information Practice Principles”, they are
notice/awareness, choice/consent,
access/participation, integrity/security, and
enforcement/redress . In other words, websites
should notify consumers that they’re collecting
personal information and that the consumers can
choose whether to provide it. The report-the
result of a three-year study of 1,400 websites
targeted at consumers-also censured the e-commerce
industry for not adequately protecting private
information, stating that “the vast majority of
online businesses have yet to adopt even the most
fundamental fair information practice….” It also
criticized the industry’s voluntary guidelines,
stating that “with limited exception, contain none
of the enforcement mechanisms needed for an
effective self-regulatory regime.”4 Only 924 of
the 1,400 websites surveyed was found to have
privacy policies. 87 percent of these notified
customers that they collect information, and 77
percent offered customers refusal rights. However,
only 40 percent gave customers access to their
information; 46 percent promised security; and 49
percent provided contact information. There is
also the question of how much these privacy
promises are enforced. In June 1998, AdAge.com had
transferred user information-including log-on
names and passwords-to theGlobe.com, an unrelated
site. Registered AdAge.com users had no idea that
the site had done so until they received an e-mail
note that welcomed them to theGlobe.com and
contained their AdAge.com passwords. This incident
provoked outrage from some AdAge.com users and
embarrassed both companies. Although AdAge.com
later apologized to its users, explaining that the
data transfer was part of a community partnership
between the sites and was designed to allow
AdAge.com users easy access to theGlobe.com’s
community features, this is a glaring example of
what can happen despite privacy promises. The lack
of effective privacy protection is widely believed
to be stunting the growth of e-commerce. Survey
after survey has shown that more people would
embrace e-commerce if they had better assurances
about their privacy. Big business and small
businesses have to realize that trust is necessary
to build long-term, profitable customer
relationships. Trust fosters customer loyalty,
referrals and repeat business, so commercial
enterprises that make privacy protection a
priority will reap the returns from their customers.