Invasion of Privacy? E-commerce and Consumer Information

1. Invasion of Privacy?E-commerce and Consumer Information Anthony Garza-Vale John Kastronis Guy Malik Matthew Ryan GVPT 333 Professor Paul Harwood

2. Introduction The introduction of commerce to the web has created a host of new controversies. Technology allows a vast amount of information to be collected about consumers both publicly and subversively.

3. Things to Consider: • Some online sites demand we submit our age and occupation at the register • positive possible uses; stores can better detect fraud and can personalize a shopping experience to better suit us. • Almost all websites use a lengthy click through privacy agreements detailing what they will do with the customer information. Very few individuals take more than a glance. • Currently various consumer watchdog groups and internet privacy advocates have pushed companies to allow an option to opt-out of tracking algorithms and prevented the combination of various profiles.

4. Objectives: • examine e-commerce and the information provided by the consumer to companies. • how this data is collected • what data is collected • where the data goes • who has access to it PLUS • why do companies collect the data? • who they share data with • how they link databases • what negative uses the companies could use the shared information for • what online stores offer in the way of privacy policies • how well they enforce the policies

5. PRIVACY • defined as the quality or condition of being secluded from the presence or view of others • the state of being free from unsanctioned intrusion • In the online world, privacy is having information a person doesn’t want known to not be known by someone unless he/she allows it. The continuing battle for privacy rights online is gaining steam and consumers are demanding more and more privacy rights.

6. Where Does the Information Go? • In today’s E-commerce environment, in order to purchase an item online, apply for telephone service, a driver's license, a social security number, medical insurance, a loan, a credit card or even a bank account, the consumer must often complete a complex form. • name, address, contact numbers, sex, marital status, credit card numbers, income, family size, hobbies, interests, and buying preferences • This information is stored in large databases • The information is then used to extract statistics and characteristics relevant for the specific research.

7. Positive Aspects • Vendors can now narrow down the possibility that a new product will not reach its base sales and cover costs of production. • Soliciting and receiving personalized information helps vendors to reach different demographic or geographical segments of society. • Maintains a highly personalized relationship with past and current customers.

8. efforts to protect the personal customer information • Online Privacy Protection (OPP) Act of 2003 • Child Online Privacy Protection Act (COPPA) • prohibits the collection of personal information about children under 13 without parental consent • “good faith”

9. So when does the problem begin? • Small companies sell their customer’s information to “Data Aggregators” • “Data Aggregators” gather bits and pieces of information about consumers’ personal information, use the gap in the law in order to construct a personal profile of buying habits, Web sites visited and even revealing information like e-mail address and IP address, and sell it to whomever is interested. • The customer is required to play by the rules established by the Web site operator – or not play at all.

10. The Threat of Linking Databases • the possibility exists for companies to exchange the information with each other. • Everything from your e-mail address, to your mailing address, to your name and age can be gathered and shared by companies that you buy goods from online. • For What? • synergizing on-site advertisements • acquiring mailing lists to send advertisements into your mailbox

11. Data is usually stored for relatively benign and even helpful reasons • analyze who is buying their products • where they need to focus their marketing and advertising efforts • optimizing the service for users based on the information submitted • so that a customer can return in the future and not have to reenter it, saving them valuable time and is less of a hassle

12. Data can also be used for things that are negative and highly annoying to the consumer • “SPAM” • Ex: A sixty year old woman can buy a book online and find her mailbox flooded with e-mail for penis enlargement pills, pornography, GamePro magazine, get-rich-quick schemes, and the George Foreman grill… • The more sites that access the data, the more likely a hacker can come along and break into the database. • user information, especially credit card details

13. Information Obtained or Used Without Customer Knowledge • cookie technology • small text files stored on a user’s computer that can identify the machine to websites it visits • allow the website to automatically log in without the user re-entering their information • also can be used at an e-commerce site to save the items in your shopping cart while you browse around for more potential purchases • The Internet also allows businesses to come together to share data on individuals to create a more complete picture of the person.

14. The Good & The Bad • Amazon.com • DoubleClick • Microsoft Passport

15. Privacy Agreements and Website Reputations • The right to privacy is a fairly new idea that is not well covered by the law (Lee 137). • The Constitution does not explicitly guarantee the right to privacy although some provisions cover the right to privacy within the Fourth Amendment, which prevents unwarranted search and seizures (Lee 137). • Currently, courts base decisions concerning privacy rights on whether there is a “reasonable expectation of privacy,” but the privacy rights that have footing in the constitution protect us only from the government and not private companies (Lee 137).

16. Most of today’s regulations concentrate on the areas where consumers have the greatest chance of being harmed through the misuse of that information. • health information • information about personal finances • information relating to children (Rubin 3)

17. Facts • Consumers are spending 26 billion dollars a year on the Internet and its expected to grow to $270 billion by 2005 (Rubin 5). • Consumers also enjoy numerous benefits from free online services that are supported by Internet advertising revenues, which is now a 9 billion dollar industry that is growing fast (Rubin 4).

18. Look Familiar? • Yahoo! • consumer personal information is gained in exchange for free services such as e-mail, news, entertainment, and customized content • finances these services to its users by selling advertising, which makes up 90% of its revenues (Rubin 20).

19. Concerns • According to polls in Business Week, 57 percent of respondents believed the government should pass laws regulating the collection of personal information (Rubin 50). • CNET reported no mishaps involving the commercial use of personal information in 2000.

20. Company Reputation • Firms do not want to risk losing profits and damaging their reputation with customers by using personal information in ways consumers do not like. • Because of the quick and easy communication over the Internet, consumers can quickly learn about the misdeeds of a firm (Rubin 40). • DoubleClick • America Online • Companies cannot risk mishandling our personal information or they risk losing our business.

21. Conclusion • The greater amount of information and the ability to use it more effectively is what will help the Internet achieve the most personalized and intelligent experience that the public is looking for. • Too strict a privacy law would hurt both the e-commerce companies but also the individual shopping online. • The Online Privacy Protection Act proposed in 2003 is a sensible bill that will promote more open practices by online advertisers and retailers. • It will give consumers more information about what they are giving up in terms of privacy for the more customized experience that can be offered.

22. This will uphold American values like freedom of information, personal freedom, and responsibility while preventing deceptive practices, which could take advantage of the uninformed.

23. Works Cited • Works Cited • Beyer, Leslie. “For Whose Eyes Only?” Internet Retailer. Jul., 2000. p40. • Consumer Privacy Protection Act of 2003. H.R.1636. April 3, 2003. Accessed at • http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.01636: on July 4, 2003 • Hunter, Richard. World Without Secrets. New York: John Wiley Publishing, 2002. • Kehoe, Louise. “Whom Do You Trust…” Financial Times. Nov. 7, 2001. p16. • Lee, Laurie Thomas. Understanding the Web: Privacy, Security, and Intellectual • Property. Iowa State University Press. 2000. • “Legislature Fails to Protect Privacy.” The San Francisco Chronicle. June 18, 2003. • pA24. • Lohr, Steve. “Group is Taking Issue with Microsoft.” The New York Times. Jul. 25, • 2001 pC1. • Morochove, Richard. “Spam, Ads Erode Utility of Free E-Mail…” Toronto Star. May 27, • 2002. pC02. • Norr, Henry. “Microsoft Gets Slapped on Security.” The San Francisco Chronicle. Aug. • 9, 2002. pB1. • Online Privacy Protection Act of 2003. H.R. 69. January 7, 2003. Accessed at: • http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.00069: on July 4, 2003 • Rubin, Paul H. and Lenard, Thomas M. Privacy and the Commercial Use of Personal • Information. Boston: Kluwer Academic Publishers, 2002. • Stepanek, Marcia. “None of Your Business.” Business Week. Jun. 26, 2000. p78. • Streitfield, David. “On the Web, Price Tags Blur…” The Washington Post. Sept. 27, • 2000. pA01. • Tedeschi, Bob. “E-Commerce Report; Critics Press Legal Assault on Tracking of Web • Users.” The New York Times. Feb. 7, 2000. pC1