Privacy worries affect personalization data

By James R. Borck, InfoWorld |  Business

COMPANIES HAVE HAD plenty of warning on the issue of privacy. As the call for privacy protection from consumers grows louder, identity-filtering companies such as iPrivacy, in New York, are gaining momentum.

Attracting the cooperation of the U.S. Postal Service, iPrivacy's software enables users to completely hide themselves from a merchant's marketing database by creating an alternate identity: a fictitious e-mail address, a one-off credit card number, and an encoded postal address. iPrivacy makes it nearly impossible to profile a shopper's habits because each identity is used only once.

So what fate awaits the business relying on personalization engines? Signs show that any company building one-to-one marketing relationships with consumers stands to be hard-hit by this backlash.

Last year Canada's Personal Information Protection and Electronic Documents Act was enacted to protect disclosure of personal information in electronic transactions and IBM announced the appointment of its first CPO (Chief Privacy Officer) to work on strengthening customer privacy and privacy technologies.

But other companies such as Digital Convergence aren't helping to ease privacy concerns among consumers.

In the past several months, Digital Convergence gave away more than one million bar-code scanners called CueCats. And users have been gobbling them up.

What Digital Convergence failed to make clear to consumers was the fact that every CueCat is equipped with a unique identification chip, linking users and their shopping habits to a marketing database. By selling the data to advertisers, Digital Convergence stands to recoup a sizable return at the expense of consumers' personal privacy.

By July of this year, the Gramm-Leach-Bliley Act of 1999 will make it mandatory for financial institutions to disclose who sees the private customer information in their possession. Perhaps this shouldn't apply only to financial institutions. By 2004, anyone doing business with Canadian-based firms will also have to comply with Canada's privacy regulations.

Can you afford to wait until 2004? I don't think so. Perhaps we're in need of some solid baseline standards, or legislation, that will enable recourse over broken privacy promises.

To make privacy a reality, it must be more than just a perception.

Advocacy groups such as the Personalization Consortium (www.personalization.org) have begun calling for the formation of privacy standards that can be uniformly audited for validity and consistency.

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