A Longitudinal Analysis of the Privacy Policies of the Fortune E-50 Firms

By Etheridge, Harlan L.; Hsu, Kathy H. Y. | Journal of Strategic E-Commerce, January-July 2004 | Go to article overview

A Longitudinal Analysis of the Privacy Policies of the Fortune E-50 Firms


Etheridge, Harlan L., Hsu, Kathy H. Y., Journal of Strategic E-Commerce


ABSTRACT

We examine the online privacy policies of the Fortune e50 firms to determine the extent to which online firms are committed to protect online consumer privacy. In addition, to determine the extent that the "dot.com bust", increasing consumer awareness of online privacy issues, and government regulations related to consumer privacy have impacted the privacy policies of U.S. firms engaged in ebusiness, we re-examine the privacy policies of the Fortune e50 firms two and one-half years after our initial investigation.

Our results suggest that most e50 firms provide basic information about online consumer privacy and that the disclosure of such information seems to be increasing. However, certain important aspects of online consumer privacy are lacking in the privacy policies of the e50 firms, particularly those related to the ability of online consumers to control how their data is used, how data collected via email is used, and how the online privacy of children is ensured. Given the sensitive nature of much of this information and the rise in computer crimes, unless online firms increase the ability of consumers of direct how their personal information can be used, the Federal Government may introduce more legislation to further protect online consumer privacy by forcing online firms to offer consumers this option.

INTRODUCTION

Online privacy is an important issue in today's digital economy. Of the many challenges facing the Internet, privacy has risen above them all as the number one concern (and barrier) voiced by web users when going online. Privacy advocates and consumer groups caution online consumers that personal information may be collected by web sites and used in ways that may compromise their privacy. Numerous events involving violations of consumers' privacy also have served as a catalyst to increase interest in online privacy (Stellin 2000; Electronic Frontier Foundation 2001; Gill 2001; Guernsey 2001). The Federal Trade Commission has targeted traditional firms such as Microsoft, The Ohio Art Company, and Eli Lilly, online firms such as Toysmart.com, Worlwidemedicine.com, Focusmedical.com, ReverseAuction.com, and GeoCities, as well as other firms with consumer privacy violations. As a result of the publicity generated from these cases, attention directed toward online privacy has increased dramatically, and several online privacy groups have emerged, e.g., the Center for Democracy and Technology; the Online Privacy Alliance; the Personalization Consortium; and the Privacy Foundation; independent privacy policy verification programs that attest to the quality of online privacy policies and practices have been formed, e.g., TRUSTe; BBB Online; WebTrust; and eSure; and the federal government has become involved in the protection of consumer privacy through the implementation of various laws and regulations, e.g., Gramm-Leach-Bliley Act, and The Children's Online Privacy Protection Act.

A question that must be asked, however, is "Are online companies listening to the issues surrounding online consumer privacy and implementing and enforcing appropriate privacy policies?" One way to determine if online companies view online consumer privacy as an important issue is to examine their online privacy policies. A privacy notice is a written statement advising the public of the collection and use of personally identifiable information and security practices of a firm. A good privacy notice is easy to find, easy to read, and comprehensively explains all of the firm's online information practices. This notice provides online visitors an opportunity to make informed decisions about the collection and use of their information. In this study, we examine the online privacy policies of the Fortune e-50 firms, fifty firms that are representative of the Internet economy, to determine the extent to which online firms are committed to protect online consumer privacy.

Due to the significance of the on-line components of these companies, online privacy issues should be very important to the Fortune e-50 firms. …

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