June 6, 2005, 12:00 AM

Most online shoppers are ignorant about retailers’ use of personal data

When it comes to shopping online, most consumers are woefully ignorant about how retailers gather and use their personal data, according to a new report from the Annenberg Public Policy Center of the University of Pennsylvania.

Kurt Peters

Executive Editor

 

When it comes to shopping online, most consumers are woefully ignorant about how retailers gather and use their personal data, according to a new report from the Annenberg Public Policy Center of the University of Pennsylvania.

The report, “Open to Exploitation: American Shoppers Online and Offline,” found that 65% of the 1,500 adults interviewed believe they know how to keep sellers on the web from taking advantage of them. But in responses to a survey of 17 true-false questions about laws and practices governing online information gathering and use, consumers on average were correct on only 7 of them.

Eighty-four percent of Internet-using adults said they believe some web sites analyze what people are reading, change the ads based on that reading, and buy personal information about the readers from database companies. Yet, most of them overwhelmingly objected to most forms of behavioral targeting and price discrimination based on a purchaser’s online behavior.

Of those surveyed, 76% said that it would bother them to learn that other people pay less than they did for the same products. Eighty-seven percent said it was wrong for an online store to charge people different prices for the same products during the same hour.

Those surveyed also lacked an understanding of what market practices are illegal. Sixty-eight percent said incorrectly that it sites such as Expedia or Orbitz that compare prices on different airlines must include the lowest airline prices.

The survey also found that 75% of the respondents believe a web site’s privacy policy means it will not share their information with other web sites and companies when, in fact, a privacy policy describes how that information will be shared.

To help consumers understand the use of their personal data online, the report suggests that the Federal Trade Commission require web sites to replace the label “Privacy Policy” with “Using Your Information.” It also recommends that the government require retailers to disclose specifically what data they collect and when and how they use that data to interact with their customers.

The 35-page study was based on a Feb. 8 to March 15 telephone survey of 1,500 adults who said they had used the Internet within the past thirty days.

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