Consumers’ Understanding of Privacy Rules in the Marketplace

Turow, Joseph, Michael Hennessy, and Amy Bleakley. "Consumers’ Understanding of Privacy Rules in the Marketplace." Journal of Consumer Affairs 42, no. 3 (Fall 2008): 411-424.

This article discusses how consumers’ lack of knowledge of online privacy rules, pertaining to web sites in particular, causes them to be less concerned about online privacy therefore causing them to do less about protecting their privacy online. He cites quotes and information from several other studies to confirm these theories. One quote that I found relevant is “the online marketplace is organized such that consumers drop their sensitivity toward protecting their information to ‘‘pursue other goals that render privacy less salient than other attributes’’ (Nehf 2007, 355)”(Turow 2008,1). He provides evidence of this in other studies done reflecting that consumers’ knowledge of websites’ privacy rules is lacking in many respects. The authors further emphasize that due to the lack of consumers’ demanding greater privacy online as a result of their lack of knowledge; there is a need for the government to create regulations to protect consumers.

The authors review various arguments proposed in literature that either defend or refute the need for government regulations in this area, maintaining on one side of the argument that the American marketplace should remain free and open as it has been traditionally. On the other hand, arguments are presented stressing that websites are not set up t o allow consumers to be able to effectively make choices about their privacy while utilizing the benefits of the website. Many websites’ privacy policies are obscure and misleading. Similar problems are cited in the article regarding privacy notices and regulations issued by financial services and health insurance companies which give consumers a false sense of security regarding the privacy of their personal information.

The authors did a study using surveys to find out what knowledge internet users possess about online privacy as part of another more comprehensive study. The larger study sought to ascertain peoples’ knowledge levels of how companies legally collect information about them on and offline in addition to testing their knowledge regarding companies’ practices of charging people differently for the same products. The authors employed a nationwide research company using random digit dialing to conduct a 20 minute survey with adults eighteen years or older from 1500 households. The questions tested their knowledge on a variety of different market privacy practices, including those of e-commerce companies, charities, supermarkets, and financial services companies. The demographic statistics collected in the surveys revealed some substantive information. Knowledge of companies’ online and offline privacy practices are affected by the following factors: the more educated an individual is, the more knowledgeable that person is about privacy, with people holding graduate degrees possessing the greatest amount of knowledge; pertaining to age, people in the 50-64 year old age group had the highest amount of knowledge and people in the 18-29 year old age group had the least amount of privacy knowledge; the privacy knowledge level was also correlated to those who responded as having the greatest amount of computer skills. Overall, the results of the study yielded that only a small percentage of the population are very knowledgeable about all of the idiosyncrasies of different markets’ privacy policies

As a result of this study and other research mentioned in this article and beyond, the authors believe there should be regulations enforced regarding online and offline privacy practices. They compare the lack of accurate and specific privacy information available for consumers to review in order to make decisions about their privacy to the issue of nutrition labeling. In comparison, nutrition labeling has relied on customers’ proclivity to purchase food based on the “claims” that are made on the labels instead of looking at the actual nutritional information. Consumer privacy rights are often presented similarly by making misleading “claims” about privacy or by making their privacy information obscure and difficult to comprehend. The authors recommend that consumers be educated about online and offline privacy practices and that the government enforces regulations regarding privacy practices. They further suggest the creation of a labeling system for consumers that is clear and specific about particular organization’s privacy policies, instead of the overly convoluted one that exists now.

This article was an excellent synopsis of a very complex issue regarding understanding consumers’ knowledge about online and offline privacy. It brought to light the lack of a specific system whereby consumers’ could quickly assess how their privacy could be affected by doing business with a particular organization. The authors did a thorough review of literature and studies done on this subject matter and related it to their own research. The methodology they utilized in taking a random sample of internet users was viable, and they had a strong response rate of over 50%. The questions they asked in the survey tested the subjects’ specific knowledge on a wide range of privacy issues. The results confirmed their initial theory that there is a need for strong and clear regulations about privacy for online and offline businesses to follow that consumers can easily comprehend.

This source fits perfectly into the research I’m doing by answering the question, “How has people's desire to enjoy and utilize the benefits of the World Wide Web superseded the relative importance to them of on-line privacy”? The ’how’ in this article is individuals’ lack of knowledge about privacy practices. The authors correct the perception that people are apathetic about online and offline privacy by relating their seeming apathy to a simple lack of knowledge regarding companies’ online and offline privacy policies. Instead of defining what privacy means, the authors highlight current online and offline privacy issues while advocating better and clearer regulations to protect consumers.