Recent Privacy Research is Misrepresented

The Electronic Frontier Foundation is the leading civil liberties organization working to protect rights online. Founded in 1990, EFF actively encourages the industry and the government to support free expression, privacy, and openness in the information society. To learn more about the issues, Web Techniques asked EFF's staff attorney, Deborah Pierce, to explain why the organization disputes recent reports that claim privacy is too expensive for businesses to maintain.

Recent studies from organizations like the American Enterprise Institute (AEI) have tried to demonstrate why protecting privacy is expensive for businesses and consumers alike. None of the studies, however, have focused on the cost of privacy breaches and the consequences faced by consumers when those breaches occur. The AEI study, conducted by Robert Hahn, even goes so far as to claim that the "costs of complying with new privacy laws may drive struggling tech firms into bankruptcy."

Most of these reports fail to account for the overall costs to consumers and businesses when privacy is compromised or information is tainted. For example, corporations often rely on flawed consumer credit reports when making financial decisions. Unfortunately, few consumers check the accuracy of their reports, and credit bureaus don't regularly or accurately make corrections to the information contained in the reports.

Credit reports also gloss over the costs incurred by consumers when privacy violations occur. Some violations can have serious, even life-threatening consequences. For example, identity theft can lead to personal financial chaos. Inappropriate disclosures of sexual orientation, gender identity, medical conditions, and other personal identifying information can lead to stalking, harassment, loss of employment and housing, loss of health insurance, erosion of relationships with family and friends, and even public humiliation when previously private information is sold to the highest bidder.

On the business side, we already know that a significant percentage of consumers aren't shopping online because they're afraid of their personal information being collected without their consent, and used in ways that they can't control. The cost of lost business to this fear is in the billions of dollars.

By letting consumers control the capture and use of their personal information online, businesses will gain far more that they would lose in instituting protective privacy practices. A survey by Pew Internet found that 86 percent of online users are very concerned or somewhat concerned about others accessing their personal information online.

In practice, nobody benefits from weak protection of privacy. Businesses may initially think that they benefit because they can sell consumer information for a profit. But in reality, companies are losing money each year because consumers are rightly afraid of what will happen to their privacy online. Instead of commissioning studies that lead us to believe that e-commerce will wither and die if strong privacy protections are enacted, we should focus on ways to better protect privacy, and thus build consumer trust and confidence.

EFF believes that the selling and sharing of personal information should take place with the informed, affirmative consent of the individuals whose personal information is being sold or shared. The current crop of industry studies, such as the one by AEI, do us all a great disservice as we fight to promote commerce while still protecting essential civil liberties online. —Deborah Pierce