The Fear Factor - handling new privacy regulations - Brief Article

American Demographics, July 1, 2001

In our cover package, Associate Editor Pamela Paul tells us that our home mailboxes will be filled with more unsolicited mail than usual this month - now that companies are required by law to divulge how they use our personal information. One "privacy notice" I received stated the following:

"We may disclose personal information about you to the following types of nonaffiliated third parties:

Financial services providers, such as companies engaged in banking, credit cards, consumer finance, securities, and insurance;

Non-financial companies, such as companies engaged in direct marketing and the selling of consumer products and services."

Yep, that basically allows this company to sell my information to just about any business on earth. But it does little to shed light on my concerns about how the company is using my personal information - and with whom it's sharing it. Granted, this privacy notice allowed me to check off a box to "limit" the personal information this company discloses to others. However, the document points to a larger problem: Businesses are focused on protecting themselves from privacy lawsuits, but few have really figured out a way to allay consumer fears about privacy.

This month, we decided to find out what exactly we as consumers are afraid of - and what businesses can do to regain our trust. With the help of market research companies Harris Interactive and Market Facts, we commissioned two polls that try to identify our specific fears, and what it would take to calm our collective worries.

The surveys expose a surprising number of consumer behavior patterns. They show, for example, how consumers' responses to privacy threats often directly contradict their stated beliefs and intentions. "The outcry over the loss of privacy outpaces the action most consumers are willing to take to protect themselves," Paul notes in "Mixed Signals" (page 44).

Yet it's not enough for businesses to toss the blame for privacy panic back to consumers. Marketers need to understand how to navigate the maze of contradictory consumer attitudes and behavior. Because, while we consumers may be protective of our personal information, we can be enticed into giving it up. As Senior Editor Rebecca Gardyn reports in the second part of our cover package, "Swap Meet" (page 50), consumers can be convinced that the benefits of privacy intrusion outweigh the costs - especially if giving up some personal information allows for more personalized products.

That's why concerns need to be addressed with clearly identified benefits. While privacy is still a complex and rapidly changing issue, there are ways for businesses to take an active approach. Marketers cannot afford to overlook the real fears surrounding privacy.