10 June 2004

Privacy Is Your Business

Privacy Is Your Business:

What's the payoff for CIOs becoming privacy champions? Better business, more secure IT and a higher corporate profile.


Increasingly, Americans are chafing at attempts by government and private sectors to sift through their personal data. In the past year, opposition from privacy advocates and politicians forced the Pentagon to temporarily drop its plans to track the movement of American citizens with its Total Information Awareness project. (Instead of completely shuttering TIA, however, the Pentagon merely renamed the initiative and classified aspects of it, essentially removing it from public view.) More recently, a growing number of states including New York and Wisconsin have pulled out of an anticrime database program known as the Multi-State Anti-Terrorism Information Exchange, or Matrix—initiated after 9/11 to track terrorists—citing cost and privacy concerns. Civil libertarians argue that Matrix, which combines criminal records data with private information such as property and business filings, endangers citizens' privacy rights.

The private sector is also taking hits on the privacy front. U.K. grocery retailer Tesco got caught conducting an unannounced smart-shelf trial with radio frequency identification tags on Gillette razor blades and canceled the pilot project after negative publicity. Retailers Wal-Mart and Benetton announced last year that (at least for now) they would keep RFID tags out of their stores.

But many businesses don't seem to understand the extent to which consumers value the privacy of their personal data. According to a recent Accenture survey, 60 percent of the 223 business executives surveyed said that privacy policies are the least important of five factors that influence consumer trust. Yet 51 percent of the 347 consumers surveyed said that they have declined to do business with a company because they were uncomfortable with its privacy protection.

The stakes are huge for companies, especially those who ignore privacy concerns. Privacy & American Business, a nonprofit group led by privacy expert Alan Westin, is currently tracking 141 lawsuits against companies for alleged violations of consumer privacy. Already these lawsuits have netted plaintiffs more than $130 million in penalties or settlements. "A privacy breach is now much more than a mere annoyance," says Rich Honen, a lawyer who specializes in technology and privacy at the Albany, N.Y., law firm Honen & Wood. "It can create a serious security risk and become a market issue for a company."

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