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 / Spring 2004 / Issue 34(originally published by Booz & Company)


Privacy in the Age of Transparency

Professor Westin used other survey data to explain the increase in Fundamentalists and decrease in Pragmatists and to draw the following conclusions: Fifty-six percent of Americans don’t believe most businesses handle consumers’ personal information in a manner they consider to be proper; 59 percent do not think the existing mixed public–private system of protecting consumer privacy is providing a “reasonable” level of assurance.

Consumers have adopted these beliefs after being exposed to a growing array of privacy intrusions. Since 1990, 33.4 million Americans have been victims of identity theft — in this case, defined as the theft of personal information with the intent to use it for fraudulent purposes. Half of these crimes occurred in the last two years, according to P&AB. There are also many disconcerting ways individual privacy is invaded. It’s impossible for individuals to use the Internet without being interrupted by cookies-based marketing piggybacking on Web surfing and purchasing habits; video and biometric surveillance is unavoidable in public places and at work; and in numerous instances, medical and financial databanks have leaked personal information and cost people their jobs, reputations, or both.

The scale and impact of these unwelcome trends is chronicled extensively in Database Nation: The Death of Privacy in the 21st Century, by longtime privacy activist Simson Garfinkel. In this book, Mr. Garfinkel is implacable about the importance of privacy to individuals and why people are so protective of it: “Privacy is about self-possession, autonomy, and integrity…. Over the next fifty years we will see new kinds of threats to privacy that don’t find their roots in totalitarianism, but in capitalism, the free market, advanced technology, and the unbridled exchange of electronic information.”

That statement may be a bit harsh, but the P&AB surveys, as well as other recent polls, indicate that consumers share many of Mr. Garfinkel’s concerns. Somewhat surprisingly, considering the depth of consumer wariness, this attitude represents an opportunity for companies, if they’re willing to develop robust privacy programs. This is a central theme of The Naked Corporation and an earlier book, The Privacy Payoff: How Successful Businesses Build Consumer Trust, by the privacy commissioner of Ontario, Canada, Ann Cavoukian, and journalist Tyler J. Hamilton. Both books argue that the companies that are open and honest in their communications, adopt privacy policies, and are very clear about how they use collected data discreetly to further corporate growth, efficiency, and performance will benefit from wider consumer acceptance in international markets. This, they further argue, is what leads to increased revenue, less litigation from the aggrieved, enhanced reputations for their brands, and more prospective partners willing to enter into lucrative cooperative ventures that require a deep well of trust.

Privacy Payoff points readers to a very powerful instrument for determining how well their companies are complying with fair information practices and to what extent these businesses promote the protection of customer privacy. It’s called the Privacy Diagnostic Tool Workbook (, and it assesses such essential privacy principles as limiting the collection, disclosure, and retention of records; instituting customer consent procedures to opt in or opt out of data-sharing programs; verifying accuracy of records; and protecting data from hackers. In addition, Privacy Payoff’s authors provide a Privacy Impact Assessment questionnaire in the book that companies can use to ensure that new technology — whether databank, biometric security system, video camera, ERP system, or others — complies with privacy requirements.

Importantly, the authors of Privacy Payoff note, privacy policies and systems are just as pivotal to the success of business-to-business relationships as they are to business-to-consumer interactions. More and more companies are entering into joint ventures, either Internet- or extranet-based, to increase efficiency and innovation in supply chains, inventory management, customer relations, and other business operations. As part of these cooperative undertakings, sensitive and proprietary corporate data is shared among all partners. If strict measures and rules are not in place to safeguard private information — such as customer, manufacturing, design, and marketing files — companies can end up unwittingly broadcasting some of their most valuable intellectual assets.

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Privacy Resources:
Works mentioned in this review.

  1. Ann Cavoukian and Tyler J. Hamilton, The Privacy Payoff: How Successful Businesses Build Consumer Trust (McGraw-Hill, 2002), 288 pages, $24.95.
  2. Michael Erbschloe and John Vacca, Net Privacy: A Guide to Developing and Implementing an Ironclad E-Business Privacy Plan (McGraw-Hill, 2001), 318 pages, $24.95.
  3. Simson Garfinkel, Database Nation: The Death of Privacy in the 21st Century (O’Reilley & Associates, 2001), 336 pages, $16.95.
  4. Albert J. Marcella Jr. and Carol Stucki, Privacy Handbook: Guidelines, Exposures, Policy Implementation, and International Issues (John Wiley & Sons, 2003), 384 pages, $80.
  5. Don Tapscott and David Ticoll, The Naked Corporation: How the Age of Transparency Will Revolutionize Business (Free Press, 2003), 368 pages, $28.
  6. Guide to Consumer Privacy in Japan and the New Japanese Personal Information Protection Law, by Alan F. Westin and Vivian van Gelder (Privacy & American Business, 2003). For a free copy, e-mail Irene Oujo at [email protected]
  7. Privacy & American Business newsletter: Click here.
  8. Privacy Diagnostic Tool Workbook: Click here.
  9. U.S. Department of Commerce Safe Harbor site: Click here.
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