The Protecting Consumer Privacy - Coursework Example

Review of Article INTRODUCTION In today’s era of massive technological advancement, privacy remains of paramount importance in the minds of the consumers. At the same time that individuals are increasing their awareness and vigilance concerning privacy matters, technology is battling to override every attempt to protect the privacy of consumers. James Nehf in his article entitled, ‘Shopping for privacy on the internet’ highlighted ‘rational reasons why Web users do not shop for privacy’ (2007, p.351). Further, the article explored the impact of the technological advancement on the privacy of customers. He emphasized the fact that consumers would not be handed privacy on a silver platter but rather they must become vigilant in their demand for Web site operators to adhere to their demand for privacy. Professors Pitt and Watson (2007) respond to Nehf’s (2007) article by utilizing an ‘ecosystem approach’ to explore the various elements of privacy. Not only do they examine relations amongst the three main participants in the privacy interactions, namely, ‘citizen/consumer/investor, government and corporation’ but also the reasons for the lack of success of the market system to protect the privacy of all stakeholders. Nehf (2007) commences his article by emphasizing that the brunt of the responsibility of protecting consumer privacy is in the hands of the individual. The individual is the one who has to attempt to reduce the risks involved in submitting personal information to any public site. Particularly, on the World Wide Web the customer’s personal information may be used by unscrupulous Web site organizers. Although ‘federal (and a few state) laws’ limit the utilization of some personal information, these restrictions are full of exceptions and many of the internet transactions are not even ‘subject to state or federal privacy laws’(Nehf 2007, p.351- 352). Interestingly, Nehf (2007) highlighted the superficial form of concern that online businesses appear to have in protecting the privacy of their consumers. These businesses profess to collect a minute amount of data on the customer which will be kept safe from predators vandalizing this data. Consistent with this apparent concern for the protection of consumers’ privacy by online businesses, consumers also are genuinely concerned with ‘identity theft’ and the possible humiliation of having their private affairs published for all and sundry to peruse. Thus, consumers attempt to protect themselves by submitting as little information as possible to these Web sites. However, the market for privacy is in dire need of reorganization for it is close to a state of collapse. Nehf (2007) explored several raison dêtre for the apparent disintegration of the market for privacy, as a consequence he postulated four reasons why consumers do not shop for privacy. These reasons include aggregation and easy transfer of data, signaling mechanisms are not yet effective, accountability problems insulate privacy violators and privacy must be salient to consumers. AGGREGATION AND EASY TRANSFER OF DATA Nehf (2007) notes that it is impossible for individuals to meaningfully protect and value their privacy rights if they are unaware of the type of information that is collected about them, how this information would be used and the possible consequences of the use and collection of their personal data. Individuals need to ‘know what is at stake’ in order to make ‘an informed choice’ on how and if to share personal information and how to best prevent the unlawful collection or dissemination of their personal data (Nehf 2007, p.352). The author of the article posits that only on rare occasions would individuals take the time to read the privacy policies of online businesses. Further, these policies are in themselves rather absurd, evasive and deceptive. Nehf (2007) singled out one example of the deceptive nature of privacy policies which appear to be straight forward. In his example he cites the use of cookies and other methods of collecting data on customers. This data is purported to be at a minimum and is shared only with affiliated companies and linked marketing associates. Consequently, the customer may then decide to use the site but the number of affiliated companies and linked marketing companies may be vast in number. These marketing associates may be involved in completely different types of businesses from the site. Each of these companies with their own information dissemination practices may already have bits of information about the customer in their database. For this reason, the consumer would not have the necessary skills or knowledge to evaluate the risks involved in sharing their personal data. SIGNALING MECHANISMS ARE NOT YET EFFECTIVE In addition, Nehf (2007) asserts that in spite of signals such as voluntary privacy seals, trust marks and other such guides used to alert customers to the privacy practices of Web sites the consumer is still hoodwinked into ineffective privacy practices by these sites. At present, organizations which provide licenses for these privacy marks do not insist that subscribers adhere to the stated privacy practices. In fact, Nehf (2007) affirms that privacy marks ‘ensure only that the business discloses a privacy policy with minimal protection of consumer interests and that the mark issuer has no knowledge that the business is not following its policy as stated.’ (2007 p. 353) Thus, an online business without privacy markings may not collect any information on their customers whereas a company with a trust mark may in fact be disseminating their customers’ personal information to a number of external sources. Therefore, trust marks allow online businesses to appear to be concerned about customers’ privacy on the surface when in reality they are only a shadow without any specific standards or vigorous implementation of the rules for real privacy practices. ACCOUNTABILITY PROBLEMS INSULATE PRIVACY VIOLATORS The third reason for the failure of consumers to protect their privacy rights and hence the subsequent failure of the market is the lack of accountability by privacy violators. Consumers are many times unaware of and unable to identify the person or the company which violated the law or their privacy policies and consequently allowed access of individuals’ personal data by perpetrators of privacy violations. Online businesses that disseminate the personal information of their customers must be held accountable and consequently exposed for inappropriate use and collection of personal data. What is a shame is that customers rarely know when and by whom their privacy was disregarded. The online atmosphere is one in which the public is not privy to specific policing strategies. Hence, many breaches of privacy may be concealed for an indefinite period. Only few cases are highlighted and exposed by the media. Further, the dynamic nature of online interactions paints an almost hopeless picture of discovering the exact source of the violation. Identity theft is one potentially dangerous privacy infringement. Even in the case of such a breach customers are unable to identify how their personal data was acquired and which organization allowed the theft to be made. The original source of the violation is virtually impossible to detect. PRIVACY MUST BE SALIENT TO CONSUMERS The final factor contributing to the market ineffectiveness is the lack of saliency of privacy to consumers. Nehf postulated that consumers must integrate their ‘privacy preferences’ with their decision on what personal data and how much of that data to share with Web site owners. (2007, p.353) The less importance consumers place in the privacy matters then the less willing would businesses be towards ensuring that their privacy policies are strong and strategically implemented. Nehf (2007) revealed two opposing results on the saliency of privacy. Firstly, studies in behavioral economics propose that consumers are in fact concerned about information privacy. Five threads of evidence support the conclusions made by researchers when consumers were asked to make a decision which demonstrated their privacy preferences in controlled studies. The first noteworthy revelation discovered is that ‘consumers are generally aware of privacy issues, and they are concerned about guarding their personal information (Nehf 2007, p.354). Secondly, consumers are willing to share their personal information for rewards such as money or other benefits from businesses. Thirdly, consumers who are aware that their data may be accessible to other companies may be willing to share the very minimum of non risky data to the particular site. The fourth conclusion is that the more sophisticated consumers utilize more safety measures to guard their personal information. They ‘may even provide false information about themselves’ to the various sites they visit (Nehf 2007, p.355). The final conclusion is that consumers perceive risk to be reduced and are therefore, more willing to share personal information when they trust the online company. This trust is borne out of the consumers’ perception that a good name/reputation is valuable to an organization and so they may be unwilling to spoil their good name by misusing the consumer’s personal information. These conclusions suggest that a solid market for information privacy is emerging because consumers are willing to shop for their privacy and businesses are encouraged to respond to the demands of the customers (p.355). However, the data obtained from experiments is sometimes out of sync with what occurs in reality. In the online arena consumers seem to behave contrary to their stated concerns in the controlled settings. Consumers rarely read the privacy policies of online businesses or refer to privacy as a deciding factor in trading from a Web site. Nehf concluded that consumer behavior is determined by ‘low-effort or low-involvement decision making’ which entails choosing the best alternative among few important elements (p.356). He also asserted that time was an important factor in the decision making process and that consumers preferred to sacrifice accuracy for the fulfillment of their decision making goals. (p.357) Nehf (2007) maintains that other factors such as making inferences about the value of an element, framing effects, that is, the format of the presentation of the material on the Web site and the consumers’ response to risk factors due to media coverage influence the consumer’s choice. IMPLICATIONS FOR PRIVACY SHOPPING ONLINE Nehf (2007) concluded his article by addressing the implications for privacy shopping online. He posits that consumers are willing to trade accuracy of their decision for other decision goals. Thus, one can conclude that consumers ‘prefer to forego the cognitive effort that is needed to read and decipher privacy policies’ (p. 359) If this conclusion is accurate then online businesses (with a trust mark to appear concerned about the customer’s privacy) may benefit from encouraging the customer to execute a transaction before guiding them to read their privacy policy. Any attempt that requires extra cognitive effort from the customer may result in deterring the customer’s preference for or use of the particular site. Of note, demonstration of outstanding privacy policy would motivate the customer to use a site. At the same time, minimization of ’emotional conflict’ would also motivate individuals to use the relevant site because customers try to avoid comparing features that are different. Interestingly, although a knowledgeable online user may know of a Web site’s diligence in protecting the consumer’s personal information, the user may still find it a rather complex procedure to choose between the benefit of privacy and alternative benefits such as ‘lower prices’ of ‘another site’(p. 359). This process of choosing among alternatives becomes even more complicated when consumers consider certain values to be ‘sacred or protected’ (p. 359). In general, privacy is one such phenomenon for individuals. Nehf (2007) highlighted affect cues which are used by individuals to compare information among alternatives. Hence, confidence or positive affect cues in a Web site may not be in sync with the actual practices of the site. These feelings are crucial in the market for protection of privacy because the feelings which may not be satisfied until the long term would influence the consumer’s choice to use the particular site and submit personal information. For it is only on extremely rare occasion a customer will be able to uncover the origin of the breach. Unlike affect cues, cognitive effort and emotional conflicts could be satisfied immediately. Thus, consumers would be more willing to satisfy the goals which give immediate gratification, that is, reduction of cognitive effort and minimization of emotional conflict, rather than the assigned values which would be satisfied later. Furthermore, Nehf (2007) asserted that framing effects will cause the consumer to give in to the site especially if there are trust marks and other signals indicating the business’ concern for the protection of personal information. Consequently, consumers are unwilling to search for more information about the site because of their trust in the site. The individual needs to remember that trust marks and other signals are only superficial in nature and not a genuine sign of concern. Moreover, Nehf (2007) added that inferences may lead to flawed decisions because consumers’ thoughts about a particular site may be misleading. This misleading nature of inferences may cause competitors to go into overdrive to improve the appearance of their privacy policy. However, Nehf warns that improving the appearance of a privacy policy may lead to emotional conflict and increase cognitive effort thus causing the competitors to appear less appealing. The availability heuristic which affects the market is the final factor addressed by Nehf. Adverse media exposure would be a deterrent for consumers. However, such media exposure would take place rarely; therefore, consumers must be vigilant for themselves and not depend totally on the media or other agencies. Nehf’s final point is that emerging research may assist the consumer in making informed decisions but this benefit would not be accrued in the near future. He purports that technological advancement can guarantee increased privacy protection only if many more consumers become competent at the necessary technology. Moreover, technology would have to keep a step ahead of data-mining activities. Finally, Nehf urged that ‘a universal and mandatory privacy software standard’ be developed (p. 362). He itemized the essential features as well as the possible challenges to be encountered in the establishment of successful software. He stressed that the consumers act now to cause change now. Passivity, Nehf claims would lead to greater challenges which come from entrenched wrong practices. A REPLY Leyland Pitt and Richard Watson (2007) commend Nehf (2007) for his excellent discourse on internet privacy. They added to what they considered to be Nehf’s analysis of a segment of the ecosystem. Whilst Pitt and Watson (2007) emphasized the fantastic benefits of the internet in today’s history but at the same time they highlight the greatest disadvantage of this phenomenon. Of note, Pitt and Watson claim that privacy is not a new problem but one that has gone into ‘overdrive’ because of technological advancement. (p. 365) They began their discourse on the definition of privacy with an Oxford English Dictionary definition as “The state or condition of being withdrawn from the society of others, or from public interest: seclusion” and ended with what was considered to be a more recent definition by Westin, (1967) ‘the ability of the individual to control the terms under which personal information is acquired and used” with information privacy defined by Stone et al. (1983) as “the ability of the individual to personally control information about one’s self” (Pitt and Watson, p. 366). Although the definitions allude to the possibility of attaining privacy Pitt and Watson claim that ‘the minute one interacts, one surrenders privacy; as soon as an individual trades, that person sacrifices privacy’ (p. 366). Pitt and Watson noted that security cameras, telephone tapping and other audio devices, radio frequency identification are also devices that interfere with the customers’ privacy. They hypothesized that ‘privacy exists within an interacting, ever-changing, ecosystem of three major players: consumers, governments and corporations’ (p. 367). These three agencies on their own as well as their interactions with each other were discussed. Consumers and Consumers Google and other search engines can lead to a number of personal information disclosures. Consequences of this free information are cyber-stalking and the revelation of other private information. Thus, we need protection from each other in protecting our privacy. Consumer and Corporation The length of some privacy policies can be daunting. Further, the more details one supplies to a corporation, the more effective and satisfactory would be the purchase. Thus, many corporations are able to gather vast amount of data on customers. Pitt and Watson suggest that the only way to ensure protection is for consumers to manage their own information rather than relying on corporations to store their personal data for them. Consumer and Government The government gathers consumers’ information mainly through the data collection for taxes that are mandatory. Some governmental organizations have established strict legislations, others have relied on codes and others on the consumer themselves to protect their personal information. In spite of strict legislation, the government is usually lax in their privacy practices and so information is unintentionally revealed. Due to terrorists threats the government has established data- mining strategies that inadvertently allow them access to consumers’ personal data. However, the original purpose of the strategies have been misused and so consumers personal information is been used for other purposes than the original intent. Corporation and Corporation ‘Corporate espionage’ is rampant in this day of information explosion (Pitt and Watson 2007, p. 372). Corporations can access another’s database and use all of its strategic plans as its own. Pitt and Watson also noted the interplay between the corporation and the government, where the government gathers information on the corporation because of mandatory corporate taxes and the government and government, where some governments may utilize data about another to cause harm to the country. Pitt and Watson concluded that the interplay of vibrant technological advancement, government and corporate espionage, the extent of .corporations’ collection of consumers’ data ‘creates a hurricane of instability in which the regular patterns necessary for markets cannot emerge. Privacy is at best postponed and more likely lost.’ (p. 374). CONCLUSION Researchers have discovered that individuals are interested in “database privacy’ (Nehf 2007, p.351) but these individuals are not interested in ensuring that procedures for the effective implementation of privacy strategies have any influence in their decision making process to choose amongst alternatives. Specifically consumers of the World Wide Web rarely read the privacy policies of the web sites. They also prefer to minimize emotional conflict and reduce cognitive effort at the expense of making accurate decisions. Pitt and Watson’s analysis of the ecosystem points us to the fact that privacy is virtually nonexistent in today’s age of information explosion. They suggest that although there is a market for privacy the actual interaction of the consumer, the corporation and the government do not lend itself to a pattern for a market. Nonetheless, Nehf urged his audience to remove passivity and begin to solicit for change to take place now in the market for privacy. His suggestion of a universal standard may be effective in the development of the privacy market but it is fraught with a number of challenges which may be overcome by the effort of those who are likely to benefit the most-the consumers. References Nehf, James 2007, ‘Shopping for Privacy on the Internet’, The Journal of Consumer Affairs, vol. 41, no. 2, p.351 -365. Pitt, Leyland and Watson, Richard, 2007, ‘A Reply: An Ecosystem Perspective on Privacy’, The Journal of Consumer Affairs, vol. 41, no. 2, p.365 -375. Read More