Data Base Study Request to Participate, P974806
Ram Avrahami - 4/15/97
In a market where the term self regulation is so often raised, there is surprisingly little discussion on the economic incentives that will let the market work well. This is a subject that I have researched and even wrote an analysis document about <1>.
The critical issue to understand is that personal information can and is treated like a product in a market. It has value, it is created (collected), sold and bought, and then used. In order for the personal information market to work well, the economic incentives of the market players need to be aligned with the best use of the information for companies and for consumers.
The fundamental problem in the personal information market, according to Prof. Gandy of the Annenberg School of Communication of the University of Pennsylvania is that "To date, the market for personal information is primarily between organizations. Individuals who are the subjects of the data which are captured, stored, enhanced and distributed electronically, remain outside the marketplace" <2>. This is a big market. USA Today has written that the market for personal information is valued at $3 Billion<3>.
Clearly, such a big market can not work well if a critical element of which is ignored. The problem is multiplied when the databases where the information is stored contains highly sensitive data which can cause individuals great harm. But even smaller harm to each individual can be accumulated to great harm to society over all. Today, we ignore those small harms, because corporations value this harm differently than individuals.
Self regulation (which is a misnomer) does not work either, because market incentives ($3B) are stronger than words and because the industry can not legally regulate itself or enforce its guidelines on every company (because of anti-trust law).
Thus, the current method of ignoring the incentives of the most important players in the market - the consumers whose information is the product - and not providing enforceable cause of action for them causes us to put patches on the market every time the harm increases enough to be noticeable.
This fire fighting ordeal will continue until consumers will finally be allowed to participate in the market as real critical players (via an opt-in) system, rather than be dismissed and only allowed to have minor input, which may or may not be acted upon and with no enforceability (via the current opt-out system). In fact, in a recent Harvard Business Review article <4>, the authors - a Harvard Professor and a McKinsey principle - claim that consumers now realize that they have been cheated to give their personal information and not get enough value in return, and that they will demand to take control.
The easiest and most painless way to do so is to require an opt-in system, as the USA Today editorial mentioned above preaches for. I have claimed to the same thing in the past two years, stating that current law already recognizes that only individuals have commercial rights to their name (thus their identifying information).<5>
This opt-in system can work well with look-up databases. Using the hosting of the FTC online discussion group, privacy have conducted a dialog with private investigators and came up with a structure in which investigators can still get the benefit of the database, while they and the database operators also retain accountability towards consumers in case of misuse of information.<6>
The Internet offers an economic way to create an opt-in system because of its low cost structure. The Internet also provides a way for increasing the harm to individuals many fold by propagating their information cheaply to all those who can harm them. The FTC must be careful not to let the harm, which may be irreparable, occur before the inevitable opt-in system takes its place.
The previous privacy report of the FTC discusses very little the rational above. I would like to participate in the Database Session of the FTC Privacy Workshop this June and present this important position.
I have been actively participating in this hot debate about the use and abuse of personal information for almost two years. This involvement started as I was trying, as a consumer, to prevent the unauthorized use of my personal information. My position has been and still is that personal information has value, that it can be and is considered as property, and that that property should be owned by consumers as the best and only logical, ethical, market efficient and legal way to use that information. I have been presenting this position in numerous forums, including all major TV stations, NPR, many radio talk shows, George Washington University and recently in the conference for Computers, Freedom and Privacy in San Francisco.
My hands-on experience could also serve the panel. My attempt to prevent the abuse of my name by legal means taught me privacy law and the ability of consumers to use the judicial system in protecting their privacy. I have been participating in the FTC online privacy discussion group from its beginning and can share much of the interesting and enlightening conversations that have taken place there. I have been conducting an online survey and petition on the issue of personal information for months now. The input from thousands of consumers provides a detailed description of what consumers really want. I have also been communicating with legislators from both federal and state levels on this issue. Finally, I have been actively involved this year in helping consumers protect themselves from unsolicited commercial email by asking mailers to remove names of unwilling recipients from their lists. This service is planned also to be expanded to remove their names from online databases. The interaction with both sides, who so far see my service positively, gave me much insight in the motives and incentives of the different parties online.
I have an undergraduate degree in computers and a graduate degree in business and years of experience in both. I understand the different sides of the issue as well as the ability and inability of technology to provide market answers. I would like to participate in the first sessions of the workshop, focusing on the use of information as product and how the market should be structured properly to prevent its abuse.
I would be honored to be invited to participate in the FTC workshop in this session.