Book review: how to build customer trust while protecting privacy.

TITLE: The Privacy Payoff: How Successful Businesses Build Customer Trust

AUTHORS: Ann Cavoukian, Tyler J. Hamilton, and Don Tapscott 

ISBN: 0-070905-60-6

PUBLISHER: McGraw-Hill

PUBLICATION DATE: 2002

LENGTH: 288 Pages

PRICE: $24.95

SOURCE: Amazon.com (www.amazon.com)

Studies have shown that many consumers are concerned about how their personal information will be used, stored, and protected by companies and other commercial organizations. Consumers also are concerned about the conditions under which their personal information will be sold or shared with other parties. Such concerns are not misplaced in a world where identity theft is increasing and Web site cookies, data mining, and other technologies facilitate the tracking of an individual's activities.

To combat those concerns, many jurisdictions, such as Canada, the European Union, and the United States have enacted private-sector privacy legislation. Although the authors acknowledge that commercial organizations must comply with such legislation to avoid fines and other penalties for non-compliance, they successfully argue that privacy protection is "both good business and good for business" and that the companies who implement privacy-sensitive practices will reap the benefits of increased customer trust and loyalty.

The Privacy Payoff: How Successful Businesses Build Customer Trust is a primer for small and large companies seeking to introduce privacy protection in their business strategies and daily operations. The book focuses on private-sector "information privacy," which the authors define as an "individual's ability to control the use and disclosure of information about him- or herself, and to determine who is permitted access to this information and who is not."

Chapter 1 introduces the underlying premise of the book: Companies can win and retain customers by safeguarding their privacy. Chapter 2 explores the economic importance of privacy protection by illustrating how privacy concerns (and fears) resulted in a loss of consumer confidence that contributed by tens of billions of dollars to the slow growth of e-commerce. This chapter further builds on the competitive advantage of trust in the marketplace by illustrating that information privacy is just as important in business-to-business (B2B) transactions.

Recognizing that many businesses are concerned that the cost of privacy compliance will be prohibitively expensive, the authors address the cost-benefit of implementing privacy-sensitive practices in Chapter 5. They argue that the cost of proactively implementing those practices will be much less expensive than the litigation, regulatory penalties, loss of consumer confidence and trust, damaged reputation, and loss of market share that will likely befall businesses that tail to appreciate the importance of safeguarding personal information and that do not modify their business practices to achieve privacy compliance.

Beginning with Chapter 5, the book offers comprehensive guidance in implementing privacy-sensitive business practices. Chapter 5 explores how to execute a privacy plan comprised of senior management support, privacy statements, privacy impact assessments, employee training, and audits while Chapter 6 describes the importance of the chief privacy officer function. Chapter 7 addresses the relationship between security and privacy and provides practical tips to secure customers' personal information from internal and external threats, such as identity thieves, hackers, and rogue employees, while also ensuring that protection methods do not unduly restrict business operations. Chapter 9 examines how an organization's marketing strategies must be aligned with the organization's privacy plan while Chapter 10 examines the need for privacy in the workplace. Chapter 11 describes various privacy-enhancing and privacy-enabling technologies that companies can deploy, such as encryption and P3P-enabled Web sites, to assure customers and potential customers that their privacy will be protected. Chapter 12 includes the authors' 25 tips to guide organizations in implementing privacy sensitive practices.

Other features of the book include an examination of privacy principles such as the Organization for Economic Cooperation and Development's Code of Fair Information Practices on which most private-sector privacy legislation is based (Chapter 3) and the evolution and status of such legislation in Canada, Europe, and the United States (Chapter 4). Chapter 8 contains a chilling examination of the many technologies used to capture personal information in our wired world (e.g., biometrics, Web bugs, and spyware) and suggestions for minimizing the threat they pose to our privacy. The book also includes a bibliography and a list of Web resources.

The Privacy Payoff is an invaluable comprehensive resource for organizations and consumers. For organizations, it provides a blueprint for implementing privacy-sensitive business practices that will assist in securing customer trust and loyalty. For consumers, it examines the privacy safeguards they should expect when entrusting their personal information to commercial entities so that they can consider privacy provisions when making purchase decisions.

Sheila Taylor, CRM, is General Manager, Southern Ontario, for CONDAR Consulting. She may be reached at [e-mail].