How Companies Can Benefit by Addressing Privacy Issues

By Miller, Jack; Arning, Rob | The CPA Journal, May 2003 | Go to article overview
Save to active project

How Companies Can Benefit by Addressing Privacy Issues

Miller, Jack, Arning, Rob, The CPA Journal

The information-gathering techniques that spur the growth of global trade also give rise to a paradox: As obtaining information becomes easier, more individuals and regulatory agencies are calling for stricter limits on the collection and dissemination of personal data.

Instead of seeing this development as a threat, leading busi-nesses view privacy protection as a way to enhance shareholder trust, build their brand name, avoid costs, mitigate risks, improve customer satisfaction, and generate potential new sources of revenues. For example, while 35 million Americans spent about $45 billion online in 2000, some researchers estimate that U.S. companies lost out on another $12.4 billion because of consumers' reluctance to share personal information over the Internet.

Perhaps a first step is balancing a customer's right to privacy with a company's interest in using customer information. Companies must understand the potential responsibilities and risks of using customer information. Until something happens to place them at risk, many organizations simply do not know how much or what kind of information they have, who has access to it, to what extent its use may be regulated, and what penalties they may face for mishandling it.

Recent examples of misuse include a large U.S. bank that paid millions of dollars to settle a complaint that it sold customer data, including account numbers and balances, Social Security numbers, and home phone numbers, to telemarketers; as well as an online advertising agency whose share price tumbled after it was informed that it would be charged with violating consumer privacy if it merged anonymous user names with data from a company it had acquired.

The lines are not always so clear-cut. For example, a large manufacturer may have to comply with federal privacy laws if it issues credit cards, and a large retailer may be affected by medical privacy regulations if its stores contain pharmaceuticals. Moreover, multinational organizations may face complex, conflicting regulations and customs.

A Strategic Issue

To prevent problems from occurring or to benefit strategically from a focus on the protection of privacy, a company should consider how to adapt its business model to recognize investment in privacy protection as an investment in an asset, instead of a cost of doing business.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

How Companies Can Benefit by Addressing Privacy Issues


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?