December 28, 2000, 1:29 PM —
FOR FOUR YEARS NOW,the Federal Trade Commission (FTC) has accommodated the Internet industry's request that it, not the government, regulate the collection and use of consumer information. In late May, the FTC decided that enough was enough.
Basing its decision on federal report findings that only 20 percent of a random sample of websites adhered to the four tenets of what the FTC considers fair privacy practice -- notice, choice, access and security -- the agency recommended legislation that would make privacy practices mandatory and enforceable.
The Internet industry, predictably, is up in arms. Lobbying groups like the Online Privacy Alliance and the Information Technology Association of America insist that such regulations are unwarranted and will do little more than open the floodgates on government regulation, which, in turn, will slow a booming economy. But if federal regulation is so abhorrent to the Internet industry, why won't e-commerce companies do what it takes to keep the government off their backs?
If e-commerce companies were to implement full-scale privacy practices, not only would they forestall federal involvement, they would actually encourage more online commerce. A recent Arthur Andersen survey found that 94 percent of 365 Internet users expressed some level of concern for their privacy, and a 1999 survey by Forrester Research found that 90 percent of consumers want to control how their personal information is collected and used. In response to a Sound Off column posted last year that asked "Do your customers really care about privacy?" nearly all readers argued vociferously that their customers do.
At a time when even well-financed retail e-commerce sites are dropping like flies, companies can't afford to play fast and loose with customer desires or with the legislative leanings of the FTC.
So why are e-commerce companies so unwilling to offer their customers privacy protections? Are the financial benefits of unfettered collection of personal data so great? Apparently not. A May article in The New York Times argued that while websites are certainly collecting data about their customers, they aren't making particularly good use of that data. "Many companies are trying to peer back through the glowing screens at Internet users," reporter Saul Hansell wrote, "but so far no one has been able to make a big business out of being Big Brother." If the unbridled collection of personal data isn't doing much for the bottom line but is discouraging consumer activity and inviting government involvement, why won't websites get serious about customer privacy?
IF CUSTOMER SERVICE IS THE DIFFERENTIATOR in the new millennium and consumers are telling us in no uncertain terms what they want, it is suicide not to listen. Get your sites up to snuff on privacy, notice and protection for your own survival!