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Warning: Privacy Does Matter

January 13, 2004
Tuesday - 12:45 am

Consumers need explicit warnings about the threats of identity theft, spam, and credit card fraud to deter them from innocently surrendering personal information online. This is the conclusion of a new study of online privacy practices conducted by Nora Rifon and Robert LaRose of Michigan State University.

Consumers who rely on privacy seals such as TRUSTe or BBBOnline to protect their privacy may be lulled into a false sense of security, the researchers said. An analysis of Web sites carrying the seals found that they ask for more personal information and protect it less than sites that have no seals.

In addition, the privacy policies posted on Web sites often contain soothing assurances about concern for consumer privacy and implicit threats that services will be withheld unless personal information is disclosed.

The MSU researchers concluded that Web site proprietors were using privacy policies not just to inform the public but also to persuade visitors to yield personal information and ignore lax privacy protection measures that could harm them in the long run.

"Our findings suggest that the Federal Trade Commission's current self-regulatory policy is insufficient," said Rifon, an associate professor of advertising. "Consumers would benefit from standards that require clear information about online privacy risks."

To counter arguments for surrendering information, the researchers crafted an explicit privacy warning box. Consumers were warned that if they supplied their names and addresses they could receive unwanted commercial e-mail or become victims of identity theft. The warnings were posted on test Web sites that contained typical online privacy statements.

Consumers who saw the warnings were less likely to supply personal information or  make purchases from the test Web sites. The warnings had their greatest impact on consumers who lacked confidence in their own abilities to protect their privacy online.

Privacy seals generally encouraged consumers to provide personal information, but not all groups were equally affected.

"To put these findings in their harshest light, they indicate that seals encourage disclosures from two particularly vulnerable groups: those who worry about online privacy but don't know how to protect themselves and those who know how to protect themselves but are careless about doing so," said LaRose, a professor of telecommunication, information studies and media.

The findings contradict previous studies that seemed to show that privacy doesn't matter and that consumers ignore their own privacy concerns when shopping and surfing online.

"Privacy does matter," LaRose said. "Consumer confusion and misinformation may explain the apparent lack of privacy effects found by other researchers. When consumers are presented with clear information about online privacy risks they will take action to protect themselves."

The experimental study was conducted in April, 2003, and involved a sample of 227 people.


Source of News Release:

Michigan State University 
Web Site


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