Study addresses consumer concerns about online privacy, safety

"Do you care if someone knows what kind of toilet paper you buy?" That's something that consumers should think about before they shop online, according to Stephen Krobin, a Management professor. "There's an inherent tradeoff in the Internet and digital technology," Krobin said. "If you want to use the 'Net, you have to tell it something about yourself." As the presence of the Internet increases in every day life, concerns about e-commerce privacy issues have also grown - particularly since privacy concerns have been raised with several big-name companies. Last week Amazon.com, the Internet mega-merchant, raised concerns by amending their privacy policy - a document that can traditionally be either an explicit agreement between an individual and a Web site or an implicit, non-binding corporate policy - to reserve the right to sell personal information they have gathered in the case that the company itself is sold. Two privacy groups, the Electronic Privacy Information Center and Junkbusters, withdrew from Amazon's affiliates program, in which other sites offer books through Amazon and collect a percentage of the sales. Annenberg Professor Oscar Gandy, a member of the EPIC board, said that the organization expressed concern with the changes to Amazon's policy. "Part of the major concern is the way third parties are involved," Gandy said. Krobin agreed. "The great danger is not what Amazon does with the data, they're a reputable firm. But if they do sell my data, I'm not sure who has it." Research done at the Wharton Virtual Test Market showed that "people are concerned about privacy, and privacy and security are reasons people don't buy things online," Krobin said. "If you go to the King of Prussia mall, you can look through hundreds of windows and nobody knows where you've been," Krobin explained. But on the Internet, "everything you do, every place you've been, everything you buy can be recorded." A survey released by the Privacy Council at last week's Global Privacy Summit in Washington, D.C., showed that more than 61 percent of those who say they do not shop online say their top concerns are about privacy and security. The concerns are not without merit - in a high-profile security breach last week, Western Union found itself the victim of hackers who gained access to nearly 16,000 of their customers' credit card numbers. The company notified users whose numbers may have been stolen, and the site was shut down for several days. And in August, bankrupt Internet toy retailer Toysmart tried to sell its customer list, contrary to its privacy policy, which had stated that user information would not be shared. The company made an agreement with the Federal Trade Commission to only sell its list to a buyer who will abide by the terms of the defunct company's policy. To protect their customers, American Express announced a new program for its cardholders that could neutralize some of the damage from an incident like Western Union's security breach by offering its customers single-use card numbers for online transactions. In July, the FTC approved a voluntary plan by a consortium of Internet advertisers to regulate the way they collected information. And in April, the Children's Online Privacy Act went into effect, requiring Web sites to obtain parental consent before collecting information from children under 13. "When we started looking at [privacy concerns], you talked about government regulation and everyone thought you were nuts," but now the privacy legislation is being seriously considered, Krobin said. "My sense is that there is movement towards increasing consumer rights," Gandy said. Gandy said he sees an "increasing public willingness to punish companies that don't keep their promises in regard to information." But Law Professor Polk Wagner, who specializes in copyright and technology issues, suggested that users may be willing to put aside privacy concerns if the price is right. "A lot of people are starting to realize that their personal information, their private information is valuable information," Wagner said. "There's starting to be some bargain-for exchanges" between Internet users and Web sites.

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