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PRIVACY POLICIES CRITICAL TO ONLINE CONSUMER TRUST

Study Shows Companies' Privacy Policies and Reputations Are Two Biggest Influences on Consumer Trust When Providing Personal Information Online

Posted on March 20, 2001

      Canadian Internet users are willing to share personal information, but their degree of willingness is dependent on the organization in question and on how clearly the reasons for collection are communicated, according to a jointly released study by Columbus Group and Ipsos-Reid.

      Contrary to popular belief, the vast majority of Canadian Internet users have shared personally identifiable information at a Web site (82%). However, there are definite reasons why Internet users are more likely to submit information at one site and not another.

      For example, 74% indicate the company's reputation made them feel more comfortable with providing this information, and 55% claim the stated privacy policy - a statement posted on the site that explains the company's intended use of submitted information - made them more comfortable with providing personal information. At a time when consumer trust is the single, largest barrier to e-commerce, this survey underscores the responsibility of companies to clearly state their intentions when gathering customer information through their Web sites.

      "At this stage of the game, having a clearly communicated and easily understood privacy policy in place is a competitive advantage," says Chris Ferneyhough, Vice President of Technology Research at Ipsos Reid. "Firms that have recognized this are enjoying the benefit of being able to develop a better understanding of their current and potential online customers. Organizations that have not yet recognized the importance of a clear privacy policy are shooting themselves in the foot and are hindering their efforts to build strong and long-lasting online customer relationships."

      The study also found that a privacy policy is the leading opportunity for organizations to build trust with Internet users that have never felt comfortable with providing personal information online.

      A total of 57% of users who have never submitted personal information online state that a solid online privacy policy would most likely make them reconsider sharing personal information, while 53% state that the company's reputation would also influence their decision. Interestingly, given the recent introduction of the Personal Information Protection and Electronic Documents Act (BILL C-6), only 36% of these users claimed that increased government regulation would make them more comfortable. Columbus Group, one of Canada's leading Internet Professional Services companies, is encouraged by the findings. "For e-business to succeed, companies have to establish trusting relationships with their online customers. This survey has provided us with more evidence that online privacy concerns can be mitigated though open communication of information policies and by clearly articulating the resulting benefits to the user," says Christopher Burke, Columbus Group's Privacy Advisor.

      Among those who have shared personal information with Web sites, the reasons for doing so are varied. For example, 62% have completed site registration forms to access premium content, 57% have entered personal information for purchasing goods or services, and 55% have provided online contest entries. However, as more Web sites are gathering information from users, the misuse of this information is becoming more apparent. The Columbus Group/Ipsos Reid survey revealed that 18% of Internet users who have shared personal information claim to have experienced a breach of their online privacy.

      Encouragingly, the bulk of breaches have been relatively minor: 86% say they were subscribed to unwanted e-mail marketing, and 43% state that their data was sold or transferred to a third party.

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