Americans Accept Personal Responsibility for Privacy Protection; New Study From PLI Suggests that Businesses Must Do More to Inform and Empower Consumers.

Business Editors/Hi-Tech Writers

NEW YORK--(BUSINESS WIRE)--July 10, 2001

Simplifying Privacy Notices Top Priority

Individuals hold themselves foremost accountable for safeguarding their personal information during commercial transactions, according to the findings in the latest wave of research released today by the Privacy Leadership Initiative (PLI).

The public also sees a role for business and government, in that order, but consumers clearly view themselves as the first line of defense in the escalating battle for control of their personal information.

"People are telling government and industry that they want the most control and responsibility for protecting their privacy, and that they are prepared to exercise that responsibility when given the tools to do so," said John Kamp, acting executive director of the PLI.

Conducted this spring for the PLI by Harris Interactive, the study provides one of the most insightful looks ever at Americans' attitudes on privacy protection and how they influence behavior both online and off.

This study was expanded from a beta survey first conducted by Harris Interactive for PLI last December, and is intended to track changes and trends with regard to consumer privacy experiences and expectations.

Privacy Notices and Seals: Living up to the Promise?

Privacy notices and seals appear invaluable in helping to ease concerns over sharing information. In fact, many online users provide information based on their mere presence. The study found that consumers are increasingly paying attention to online privacy statements (82% in April vs. 73% in December).

About the same number of online users have seen third-party seals (25% in April vs. 22% in December). And while almost half (45%) of online users feel business Web sites are better at providing privacy notices, a majority (59%) still feels that businesses do not do a good job of informing consumers about what they do with their personal information.

Therefore, it is not surprising to learn that fewer online users actually read the privacy notices than they did in the first survey (67% in April vs. 78% in December).

For those who rarely or never read the privacy statements, the primary reasons given were not enough time/do not want to take the time (20%) and do not buy online/give out personal information (20%). Fifteen percent feel the notices are too long or have too much detail.

Experience with privacy policies seems to help, as those who always/sometimes read policies are more likely to consider them at least somewhat clear and somewhat user-friendly.

The study took place in April and May, at a time when financial service companies were in the midst of a national mail crusade to notify their customers by July 1 about how personal information is gathered and used, in order to comply with a 1999 banking deregulation law.

By adhering too strictly to legal terminology, these notices may well have had the unintended effect of arousing further confusion and distrust - just the opposite of the law's intent.

"A perplexity virus has spread throughout the nation in recent weeks, as consumers opened their mail to find lengthy notices full of legalese about privacy. Lawyers and lawmakers seemed intent on mandating notices few consumers could read and understand. Both government and industry must inoculate themselves against repeating the mistakes of the legislation that set the virus loose," Kamp noted. "Privacy notices must be dramatically simplified - both online and off - if they are to be a useful tool in managing one's privacy. With some of the most respected companies and organizations as members, the PLI is uniquely positioned to lead the business community in simplifying privacy notices and thus, bridge the credibility gap with consumers. In fact," he added, "this is a number one priority for us."

"It's not enough to provide just a privacy statement," commented David Krane, Senior Vice President for Harris Interactive. "For any organization interested in growing their business both online and offline, they must give consumers options and tools to help safeguard their privacy, as well as consumer-friendly messages that don't require a law degree or translator to follow. There is certainly room for improvement in this area."

To help businesses improve the way in which they address privacy issues, the PLI launched www.understandingprivacy.org earlier this year, one of the most comprehensive education sites dedicated to both online and offline privacy. Within the site is the Privacy Manager's Resource Center, which offers step-by-step guidance in developing and implementing appropriate privacy policies.

Another feature is the Consumer Toolbox with simple tips and tools to help individuals manage their privacy.

Consumer Confidence: A Mixed Bag

The study also shows that online users have mixed feelings on whether existing laws and organizational practices provide a reasonable level of consumer privacy protection. Forty-three percent of online users feel businesses have no incentive to protect consumer privacy.

And, only half of all online users feel consumers have an appropriate level of control over how their information is collected and used. On average, online and non-online users trust business and government almost equally to set and implement standards regarding the collection, use and protection of personal information, yet that confidence level isn't very high.

"Consumer confidence is the key metric measured by the PLI, and it's clear from this study that our job is not done," Kamp added. "Therefore, PLI is redoubling efforts to help consumers understand what they can do to protect their privacy, and to spur the creation of new, consumer-friendly tools to assist them."

The study also revealed that online and non-online users are slightly less active today than five months ago in protecting their privacy. And, few of those online have actually taken steps such as setting the computer to reject cookies (24%) or installing software to make purchases anonymously (10%).

Security Concerns Top the List

Online users responded unaided they were most concerned (23%) about security or hackers invading their privacy. The second most prevalent concern was having their behavior monitored/general lack of privacy and the third was credit card or financial fraud (6%). Somewhat surprisingly, only four percent actually answered that they do not want personal information sold or given to third parties.

Upon further examination specifically regarding information use and collection, the top two concerns were 1) sharing or selling information to other companies with whom they have no relationship (76%) and 2) receiving unwanted advertisements for unwanted products and services, or spamming (75%).

Despite these concerns, more than half (53%) of online users feel the benefits of the Internet outweigh the use and collection of personal information. And, a majority of online users still believe personalization is a good thing (59%), compared to 43% of non-online users who share that view, a number that's down from 49% last December.

Whereas better customer service is the primary benefit non-online users are seeking when they choose to share their personal information, online users are most willing to share their information for product discounts.

"Concerns don't always translate to behavior," noted Krane, "which means privacy is an issue that continues to evolve. Certainly, familiarity with the medium helps, but I think most people would be willing to share more basic information with offline and online companies in exchange for goods and services if they were assured their information was being collected and used appropriately. And that's something the business community must accomplish."

"This round of research is helping us structure our next round of contributions to the privacy arena so that they have the most impact. Because, at the end of the day, good privacy is good business, and everyone can benefit from that," Kamp concluded.

This PLI/Harris Interactive study, second in a series of seven, was conducted between April 19 and May 4, 2001. A national cross section of 1,001 adults (aged 18 and over) were interviewed by telephone and 2,180 adults (aged 18 and over) were interviewed online. The telephone and online results were weighted to be representative of the general population and the online population, respectively.

For the executive summary, go to http://www.understandingprivacy.org/content/library/research.cfm.

ABOUT THE PRIVACY LEADERSHIP INITIATIVE

The PLI is a partnership of visionary CEOs from 15 major corporations and nine leading business associations that believe individuals should be able to choose what and how personal information is used in the pursuit of better meeting their needs.

Through research and knowledge building, the PLI is working to build a climate of trust - both online and offline - to help accelerate the emergence of the information economy as a safe marketplace. For more information, please visit our Web site at www.understandingprivacy.org.

ABOUT HARRIS INTERACTIVE

Harris Interactive (Nasdaq:HPOL), the global leader in online market research, uses Internet-based and traditional methodologies to provide its clients with critical knowledge concerning the views, experiences, behaviors and attitudes of people worldwide.

Known for the Harris Poll, Harris Interactive has 45 years of experience in providing its clients with market research and polling services including custom, multi-client and service bureau research, as well as customer relationship management services. Harris Interactive acquired the custom research group of Yankelovich Partners in February 2001.

Through its U.S. and Global Network offices, Harris Interactive conducts research around the world, in multiple, localized languages, using its proprietary technology to survey its database of more than seven million online panelists. For more information about Harris Interactive, please visit our Web site at www.harrisinteractive.com. EOE M/F/D/V