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Sealing the Privacy

Dot-coms have one major hurdle to clear: consumer privacy.
Joseph McCafferty, CFO Magazine
October 1, 1999

It's no secret that many companies are staking their futures on E-commerce. But the dot-coms have one major hurdle to clear: consumer privacy.

Many consumers still do not feel comfortable providing personal information or credit card numbers online. So businesses face a Catch 22; they can target consumers better on the Web using their computer-collected preferences and buying patterns, but consumers are less likely to provide information if they think their privacy is at risk.

"The enormous potential that Internet commerce promises will not be realized until businesses can figure out how to make consumers more comfortable," says Sydney Rubin, a principal at Ignition Strategic Communication, which represents the Online Privacy Alliance, in Washington, D.C. That group of companies and associations, including America Online, Yahoo, and Sun Microsystems, promotes the use of privacy safeguards. Rubin advises companies to adopt a privacy policy and post it online. The policy should state what information is being collected, how it will be used, and what parties it will be shared with. Moreover, consumers "should be able to choose how their information will be used," says Rubin.

Companies can also allay consumers' fears by informing them of the security they have to protect their information. "Security and privacy go hand-in-hand," says Rubin. Still, most sites do not disclose the steps they have taken to protect information.

Businesses that want to go a step further can have their privacy policies evaluated by an organization that provides a privacy seal of approval, which can be posted on their Web sites. BBB Online, an offshoot of the Council of Better Business Bureaus, is one of the least expensive programs. It charges $150 to $3,000 for an evaluation, depending on the size of the company. Other programs include Truste, which was developed by a group that includes the Electronic Frontier Foundation and Boston Consulting Group; and CPA Webtrust, which was developed by the American Institute of Certified Public Accountants.

Companies fear that if they can't impose self- regulation, the government will step in with its own, more-stringent regulations. "Government intervention is the last thing businesses want," says Russ Bodoff, senior vice president of BBB Online.




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