In March 2000, the Information Technology Association of America, or ITAA (www.itaa.org) sent a letter to William Daley, the US Secretary of Commerce. In it, the business and technology organization essentially advised the Department of Commerce to think twice about adopting new measures that would protect the rights of consumers who shop on the Internet. The letter noted that stricter regulations on Net advertising could force many Web-site operators to offer their services on a subscription-only basis. “Internet participation could become unaffordable to many middle- and low-income Americans,” wrote ITAA president Harris N. Miller.
Apparently, the ITAA felt compelled to write the letter after word got out that officials at the Commerce Department and the Federal Trade Commission were considering placing new restrictions on Internet advertisers. In the letter, the ITAA also told Secretary Daley that the industry’s own regulatory practices, combined with existing laws and technology innovations, such as the Platform for Privacy Preferences, would be sufficient to protect a consumers’ right to privacy.
Of course, any time an industry group says it’s best left regulating itself, red flags go off in Washington, DC. Indeed, despite the ITAA’s pre-emptive strike, it appears that Congress will soon pass some kind of legislation increasing privacy protection for online shoppers. In March 2000, Congress called a meeting with E-commerce industry heads to explore new E-privacy guidelines. Members of the House and Senate have also set up a task force and bipartisan caucus to examine the issue, and both parties have recently introduced a slew of Internet privacy bills. Arguably the most stringent is Sen. Robert Torricelli’s (D-NJ) plan that would make it unlawful for companies to place a user profile text file on a consumer’s hard drive without permission. “The fundamental right to privacy should not be sacrificed to the Information Age,” Torricelli said in a statement.
At the same time, many privacy advocates want to see some kind of federal watchdog agency — the E-commerce equivalent of the Environmental Protection Agency — empowered to bring privacy violators to heel. “We need a resource within the federal government that wouldn’t be subject to the vagaries of the legislative process,” argues Simson Garfinkel, author of Database Nation, a book on privacy in the 21st century.
Ironic as it seems, the recent flap over Internet privacy presents an inviting opportunity for savvy managers at E-commerce operators. The fact is that corporate managers who develop comprehensive E-commerce privacy policies — and make them clear to consumers — have a real chance to win over customers.
Indeed, some surveys indicate that privacy is the number one concern of Internet shoppers. “I predict that consumers will seek out sites where they feel safe,” says Randy Covill, a senior analyst for E-commerce applications and strategy with Boston-based AMR Research. “What we’re looking at with the privacy debate is an opportunity for E-commerce companies to be explicit about their privacy policies, to use them to competitive advantage.” In the end, the company that understands that the customer is not only always right, but always has rights, will win the loyalty of online shoppers.