Consumer privacy, the darker side of the Net

Eric Auchard

NEW YORK: In the age of computer networks that connect everyone and everything, threats to privacy once seen as the stuff of science fiction now looms large, from individual identity theft to data trade wars between nations. Privacy protections spelled out a century ago to guard against encroaching technology - the camera, the high-speed printer, tabloid newspapers, the telephone - are struggling to keep pace in the Internet Age.

"The Internet has put a fine point on people's fears that technology was gathering incredible amounts of information and misusing it," said Brian Smith, an attorney with Washington law firm Mayer, Brown & Platt and a former Treasury official. The technologies grow more sophisticated - and interconnected - each year. They include Internet user tracking software called "cookies," netmikes, Webcams, customer management software, ‘smartcards’ with ID chips, biometric software that track finger or palm prints and perform signature, voice, retina or facial recognition.

But, what some see as privacy threats, many others - at least in the United States - consider practical convenience. The free flow of information allows for simpler, speedier transactions. Willingness to give up personal data make possible cheap home loans, competitive interest rate credit cards, low drug prescription prices, and discounted mail order catalog clothing sales, to name but a few.

But in the new language of privacy, ‘always-on devices’ and ‘pervasive computers’ mean a user is never disconnected from a network and communications devices become personal trackers. Wireless phone operators in Europe and Asia, trailed by the United States, are gearing up to offer mobile commerce services using satellite-based location-finding technology, promising on-the-go convenience for shoppers willing to be traced.

Separate surveys finds that nearly three-quarters of US companies monitor their employees' Internet use. Privacy is shaping up as the major social issue of the Internet Age.

Universal goal, but regional safeguards vary

Numerous mechanical devices threaten to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the housetops,’ two Boston lawyers wrote in an 1890 paper that defined the modern right to be left alone. Americans views' are rooted in mistrust of government and as a result there are few national privacy laws.

Human rights groups see privacy as one of the most basic of social rights and most national constitutions at least pay lip service, echoing the privacy rights spelled out in the United Nation's 1948 Universal Declaration of Human Rights. By contrast, China has long traditions of government keeping close tabs on citizens; the word "privacy" is hard to translate in Chinese, the closest meaning may be "secret."






Europeans have come to see privacy rights in recent decades in terms of ‘data protection’ that put limits on commercial trafficking in consumer information and the trans-border flow of data about citizens. Europe's Data Protection Initiative puts forth a comprehensive data regulation approach that requires multinational companies, even US ones, to limit the data it can collect on Web sites, in direct marketing, and about their own employees and meant for internal, administrative use.

These restrictions threatened a breakdown in international e-commerce until the two sides negotiated a truce last year. The conflict between consumer protection and free data flow remains a barrier in data flow that could still spark an Internet trade war between United States and Europe far more serious than the recently ended dispute over banana trade.

Informed consent is the buzzword among regulators debating new privacy policies. How informed remains the center of dispute. US data marketing policies offer legalese and fine print that leave most consumers baffled. Consumers may be given the option of opting-out of providing personal details, but few take up such offers.

A recent study by Consumers International, a federation of consumer organizations, found a majority of 750 European and American Web sites in 12 countries failed to comply with most international privacy protection standards.

Privacy looms large over consumer marketing business

Technologists advocate a variety of technical fixes to protect privacy. Entrepreneurs have tried for several years to create a new privacy protection industry, with schemes that cloak online habits or offer monetary rewards for disclosing personal data. Big accounting firms and established credit card data verifiers are pushing into the business. "We define privacy not as anonymity but control over data," said Craig Nathan, co-founder of one such firm, San Francisco-based MEconomy.

For the economy at large, worse than any specific limit on database marketing is the threat that a growing hodgepodge of state and country-level regulations will hobble mass-marketing campaigns on the global Internet or national broadcast media.

Data sharing has deep roots in the old economy. L.L. Bean, the US clothing catalog retailer, got his start in 1912 buying hunting license data from states. Major software makers, credit card processors, health information collectors see consumer information market as having vast growth potential.

Detractors of the view that privacy is some absolute right argue that this principle must be balanced against competing interests that include security, law enforcement, public health, consumer marketing, not to forget free speech. "What does privacy mean to anyone? It's an over-used word," Weitzen said. "A majority of people really mean security when they talk about privacy," he said.

(C) Reuters Limited 2001.