December 26, 2000, 9:55 AM

For Whose Eyes Only

(Page 2 of 2)

“Cookies are extremely important for this process because they enable us to personalize the shopping experience for the consumer,” he explains. “But how you use that information is a different question-perhaps an ethical one. I don’t think Beautyjungle is violating privacy rights by the way we use customer information today.”

Kry also emphasizes the company won’t sell its data to anyone. “We are adamant about that,” he says. “It is very important that in the long run we build trust with our customers, and that transcends everything we do.” But Beautyjungle’s privacy policy, which is buried deep at the bottom of the site’s home page and easy to miss, says something different. While explaining what customer information is gathered and used for, the policy says aggregate customer information may be released to “reputable third-party vendors.” It also goes on to say that currently Beautyjungle does not “sell, trade, give away or rent your personal information to others. We may decide to do so with trusted third-party partners in the future.”

Kry says the site’s customers haven’t shown tremendous concern over privacy, but he acknowledges that even one concern is too many. “We have to keep asking ourselves are we doing enough?”

CDnow waits it out

Despite the recent surge of privacy concerns, CDnow executives say they’ll wait and see where the issue goes before considering changes to their current policy and how it is displayed. According to CDnow executives, the controversies at DoubleClick and Amazon had little spill over to their customers. And without such an uptick in calls or e-mails, the site has no plans to review its policy or display it more prominently.

Like Beautyjungle’s policy, CDnow’s is accessible via a link dis-played at the bottom of the home page. The policy itself runs only five paragraphs, but clearly maintains that the company will not rent or sell cust-omer information without permission. Like other sites, CDnow shares aggregated information to third-parties, but the policy does not go into detail.

As for tracking where its customers go on the site, CDnow is selective about doling out cookies, says Russ Cherry, the site’s vice president of Internet technology. Customers who register for an automatic log-in are assigned a cookie, but they can shop freely on the site if they disable the function. Only customers who have opted-in for special offers and promotions receive any type of personalization or recommendations. “As far as our marketing campaigns and the segmentation we do offer our customer base, we get that off the preferences and the e-mail programs that customers sign up for,” Cherry explains. “The only additional thing we do is that customers are able to identify their favorite artists and that can be used as part of our segment-ation criteria for e-mail campaigns. But it is all information that customers have actively given us.”

Despite the emphasis on privacy policies, many sites don’t post one at all-a whopping 77% of 30,000 well-trafficked sites, says Enonymous.com. According to the Personalization Consortium, an international advocacy group that promote responsible one-to-one marketing on the Web, 58% of Web users require a privacy statement before sharing information and 51% read the privacy statement before registering on a site.

Michele Slack, analyst with Jupiter Communications, contends that few consumers bother to read privacy policies. Plus, it takes more than a good policy to persuade consumers to give up personal information. “Consumers aren’t used to being tracked, and they don’t like it,” Slack says. “For the most part, when you buy something in a physical store, nobody is tracking you. Nobody is watching to see what you buy. There is no record tying you to the purchase you make.”

What retailers can do she says, is offer some value to customers in return, such as customized welcome messages, access to members-only areas, content designed especially for them, information about site events and developments, and targeted advertising. The important thing, experts agree, is to show consumers they are truly getting a benefit from the information they provide.

Browsers, never buyers

If retailers don’t address the privacy issue, Slack and others maintain, consumers who only research products online will never become buyers.

Various federal lawmakers are taking action by introducing a slew of privacy bills that would regulate the use of personal inform-ation, data profile appending and assigning of cookies. For example, Rep. Bruce Vento (D-MN) is sponsoring HR 313, the Consumer Internet Privacy Protection Act of 1999, which would give the FTC investigative and enforcement authority and would prohibit commercial Web sites from disclosing personally identifiable information without written consent.

Web companies argue that such regulation would strangle the entre-preneurial spirit of the Internet. “The thing that makes the Internet so dynamic, so exciting and the ultimate in fair marketplace is this non-regulated aspect,” says Beautyjungle’s Kry. “But on the other hand, the potential for abuse is there. Maybe there should some minimum regulation to protect the consumer from any abuses that might occur.”

Until there are clear universal policies, others are left to question the ability of the Web to be self-regulating. “Because of the amount of information that is available and the amount of publicity from the media that surrounds the Internet, we have smarter consumers than we have ever seen,” says YOUpowered’s Lowell. “So their fear of what happens with their information on the Web will start a movement toward self regulation. If a retailer isn’t respecting its customers privacy, their competitor will.”

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