Most consumers don't mind sharing personal information for marketing purposes with a company they trust. In fact, shoppers provide personal information all the time, especially if they're offered a freebie to do so, or if they get access to a personalized Web site.
A recent survey by the Pew Internet & American Life Project, a nonprofit organization that evaluates the social impact of the Internet, found that while U.S. Internet users want a guarantee of privacy online, they're willing to give Web sites personal information in return for content they like. In fact, 54 percent of respondents had done it, and another 10 percent said they'd be willing to.
What consumers do object to is the way some Net businesses track users across multiple sites-without their knowledge-and collect huge amounts of information about them, such as spending habits, income, illnesses and occupation. Then these companies try to make money with this information. Not surprisingly, consumers also don't appreciate when a company says one thing about how they handle their customers' private information but then does something different.
Take TiVo, for example. The maker of digital video recorders was put in the hot seat earlier this year when it was revealed that the company didn't clearly disclose how much information it collects about users and their TV viewing habits. Privacy advocates pointed out that TiVo recorders, located in users' homes, were set up to automatically transmit streams of data, such as detailed viewing information, to the company's headquarters each night. This was in direct contrast to statements made in the recorder's owner's manual, which asserted that "unlike the Internet, all of your personal viewing information remains on your PTV receiver in your home." TiVo says that phrase has since been removed from the manual and that data-collection policies have also been modified.
If you don't want to find yourself in hot water, think in terms of full disclosure. "Companies must fully inform their customers of what they'll do with their information and explain why it's needed and how it offers value," says privacy expert Dr. Alan F. Westin, president of the Center for Social and Legal Research in Hackensack, New Jersey. "They also must give them choices and show that they respect and implement those choices."
Melissa Campanelli is Entrepreneur's "Net Profits" and "Net Sales" writer.