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Source: AccountingWEB

Posted on February 26, 2002

      "GUARANTEE my privacy and I'll be inclined to buy from you" is the message that consumers are sending to businesses - both in an offline and online environment.

      In a recent survey conducted by Harris Interactive on behalf of Privacy & American Business, and sponsored by the AICPA and Ernst & Young, consumers were loud and clear on two issues:
1. We don't trust businesses in general;
2. Protection of our privacy is paramount.

      What do businesses need to do to win consumer trust (and their dollars)? Having a privacy policy is not enough. Adhering to a privacy policy is better, but is still not enough for most consumers to feel comfortable doing business with a company. Verification by a third party that a business has a comprehensive privacy policy and is strictly adhering to it will lead 9 out of 10 consumers to do business with that company.

What are consumers most concerned about?

      The concerns foremost in the minds of consumers relating to privacy are:
1. that businesses will provide their information to other companies without the consumer's permission;
2. that their transactions may not be secure;
3. and that hackers could steal their personal data.

      The survey also found that businesses which violate consumers' privacy expectations have reason to worry. Eighty-three percent say they would stop doing business with a company entirely if they heard or read that the company misused customer information.

What should businesses do to address their customers' concerns?

      Clearly stating a privacy policy on a web site or in print is the bare minimum a company should do. "Companies looking for the enthusiastic participation of consumers will have to not only clearly communicate their data handling practices, but will need to prove that they in fact follow them," says Kristin Valente, Innovative Assurance partner at E&Y. According to the survey, the single most effective activity a business can take is to have independent third party verification of a company's adherence to its stated privacy policy.

What should be verified?

      Consumers were clear as to what should be verified so they could increase their confidence in doing business with a firm:
1. that security procedures are adequate (90%);
2. that the company does not release customer personal data without permission or unless required by law (89%);
3. that access within the company is limited (84%);
4. that the company is only collecting the customer information that its privacy policies indicate (84%);
5. and that information use or sharing follows stated privacy policies (81%).

How to proceed?

      A number of organizations are offering third party verification and assurance of privacy policies. The CICA/AICPA WebTrust (www.WebTrust.net) program is one. Many CA and CPA firms offer both informal and formal reviews. And Internet leaders such as Verisign offer assurance services as well.

      Oh, one more thing. You may want to re-read your privacy policy that's posted on your web site. It may not have been updated in the last few years, and you know a lot more today than you did when you first posted it.

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