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Net Prophet - by Dylan Tweney

May 11, 1998

Lack of trust hurts consumer commerce for online retailers


Here's a quiz: What do the following terms have in common? Military intelligence, jumbo shrimp, soft rock, online privacy. That's right -- they're all oxymorons.

As I discussed last week, you don't have much privacy online. The Internet makes it ridiculously easy for anybody to access information on companies and individuals.

But what if you purchase a product from an Internet-commerce site? Do you have any assurance that the company you're buying from won't use your personal information for direct marketing? Worse yet, what if they sell that information to a third party?

Balancing act

The problem is that this consumer information is one of the most valuable things a company can get from I-commerce.

I-commerce transactions leave the selling company with a tremendous amount of information about customers: name, address, credit card number, plus a host of details about what the customers' interests are, what links they clicked on, and so on. Even more conveniently, this information is already in a database or server log, where it can easily be accessed and acted upon.

Of course, this kind of information tracking is already going on in the physical world. The Internet merely facilitates information collection, often without the customer's knowledge that it is happening.

Many consumers are not comfortable with companies buying and selling information about them. Some don't even like the idea of a company using personal information at all.

Before consumer I-commerce can really take off, consumers need to have a certain degree of trust in the companies they deal with. Customers who are concerned about these issues won't do business with companies they think are taking advantage of them.

But how can consumers find out about companies' information privacy policies? And how can companies reassure potential customers that they are on the up-and-up?

Third-party agencies

One possible solution is regulation by a government agency such as the Federal Trade Commission, and regulation of some sort may eventually be inevitable. But right now it could seriously impede I-commerce growth.

A better alternative is a private, third-party watchdog agency that functions like the Better Business Bureau by keeping an eye on privacy policies.

One such agency is TRUSTe, a nonprofit organization at http://www.truste.org. TRUSTe offers the online privacy equivalent of the Good Housekeeping Seal of Approval for Web sites that agree to disclose and abide by their personal information policies.

This doesn't mean that a Web site with the TRUSTe seal on it isn't going to use your personal information. What it does mean is that they will tell you exactly what they're doing with that information so you can make an informed decision about whether you want to do business with them. Furthermore, TRUSTe periodically audits these sites to ensure they are true to their word.

Slightly more than 100 Web sites sport the TRUSTe logo. Many more will need to sign on for the organization to reach critical mass, however. Ultimately, for the TRUSTe logo to work, it must become a virtual requirement for doing business online.

Until then, online privacy will remain a contradiction in terms.


Dylan Tweney edits InfoWorld's Intranets and I-commerce product reviews online and in print. He welcomes your comments at dylan@infoworld.com.


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