They worked with the FTC to define the following four Fair Information Practices, rules designed to prevent companies from abusing the information they receive through online profiling (Computer law tip of the week, 2000):
Rule 1 (Notice): A company must notify customers that it uses online profiling to track their online habits. If it collects personally identifiable information about customers, such as their names, addresses or telephone numbers, the company's website must clearly and unambiguously notify them of this fact before the company collects this information.
Rule 2 (Choice): Depending on the type of information a company collects, there must be opt-in and opt-out options. Opt-in, or obtaining the customer's permission, is required to link personally identifiable information that a company has about a customer such as name, address or telephone number with data acquired about Web surfing habits. Opt-out means that the customers have to be given the chance to say no, but they don't have to explicitly agree. Opt-out is required when merging non-personal data about customers.
Rule 3 (Access): Customers must have reasonable access to personally identifiable information that a company keeps about them for profiling.
Rule 4 (Security): A company must make reasonable efforts to protect the data it collects for profiling purposes from loss, misuse, alteration and improper access.
Compliance with Self-Regulation
According to the Federal Trade Commission (FTC), NAI's membership constitutes over ninety percent of the network advertising industry in terms of revenue and ads served. Therefore, the FTC has concluded that legislation is required to bring the remaining ten percent of the industry in compliance with NAI rules of online profiling conduct. Further, the FTC states that:
Self-regulation cannot address recalcitrant and bad actors, new entrants to the market, and drop-outs from the self-regulatory program. In addition, there are unavoidable gaps in the network advertising companies' ability to require host Web sites to post notices about profiling, namely Web sites that do not directly contract with the network advertisers; only legislation can guarantee that notice and choice are always provided in the place and at the time consumers need them." (Online profiling: a report to Congress, 2000).
Fair Information Practices developed by the NAI do not provide users with the level of privacy protection that they would like to have for a variety of reasons. With regards to notice, Web sites privacy policies are hard to find and do not clearly state what personal information is collected and how it will be used and cookie transactions are not transparent to the user (Rotenberg, 1998). Under these circumstances it's difficult to argue that consumers really have the choice of opting-out when online profilers merge non-personal data about customers. Most Websites and Internet advertising networks do not make it possible for individuals to access their own data (Rotenberg, 1998). Companies do appear to be making reasonable efforts to protect the data they are collecting, but they are doing so to comply with other laws rather than the Fair Information Practices.
Consumers deserve better protection of their online privacy. Seventy percent of them believe that their should be new laws to protect their privacy (Statistics). The solution for the above problems is to make opting-in mandatory for all online profiling, not just the current recommendation for opt-in requirements only for linking personally identifiable information with Web surfing behavior. Further, this cannot be a voluntary activity as the degree of non-compliance with existing guidelines clearly indicates.
Despite common views that opt-in requirements will lead to the death of personalization and targeting marketing, this doesn't appear to be the case. A 2005 survey revealed that eighty-one percent of the respondents said they were interested in receiving personalized content (Kerner, 2005). Of these, sixty percent indicated that they would be willing to spend a minimum of two minutes answering questions to obtain the personalize content. and, twenty-six percent reported that they would be willing to spend at least six minutes answering questions. Only twelve percent said that would not be willing to answer personalization questions.
Although people are willing to answer questions to receive personalize content, they still want to protect their privacy. Fifty-nine percent of the people stated that they are not willing to share personal preferences and forty-six percent would not be willing to share demographic information (Kerner, 2005). Only thirty-two percent of the responding would knowingly consent to allowing Web sites to track clicks and purchases in exchange for personalized content. Consumers are very concerned about the security of their personal information and do not want to voluntarily or involuntarily disclose it.
The bottom line is that most consumers want personalization, but they do not want to give up their privacy to get it. and, there's no need for businesses to violate privacy rights as they are currently doing by insisting on invasive online profiling practices. Opt-in strategies can simultaneously satisfy the needs of targeted marketing and consumer privacy.
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