FTC: Consumer Privacy Comments Concerning MatchLogic--P954807
July 11, 1997
Re: Session II, Consumer Online Privacy Question 2.6
MatchLogic would like the opportunity to provide the Federal Trade Commission with our comments to questions asked in Session Two of the Public Workshop on Consumer Information Privacy.
Our company manages online advertising campaigns for leading advertisers, networks and web sites. We focus on providing consumers with the right message, at the right time, at the right place. Founded in Colorado in 1996, members of our team come from leading information services companies. Our goal is to provide consumers with the opportunity to make the most of their online experience.
MatchLogic is firmly dedicated to providing a positive experience for Internet users. Our policy is firmly grounded in providing consumers with full disclosure and control. As indicated in our comments below, we are making every effort to realize that goal.
If you have any questions, please contact me at your earliest convenience.
Consumer Privacy Online
Of the commercial Web sites that collect, compile, sell or use personal information, how many provide consumers choice with respect to whether and how their personal information is to be collected and subsequently used by those sites? With respect to such Web sites, describe (1) what choices are provided to consumers and how such choices are exercised; and (2) the costs and benefits, for both consumers and commercial Web sites, of providing such choices.
The success of electronic commerce on the Internet is largely dependent on consumer confidence. Until consumers are ensured that transactions on the Internet are secured, their willingness to support web sites and advertisers will be limited. Web sites that seek consumer participation need to offer assurances to consumers that their personally identifiable information is secured.
Commercial web-sites rely on consumer confidence to build a value-added service for advertisers. Receiving information from consumers about their preferences, enables web sites to demand higher ad space rates and in turn increase revenues. This model helps web sites offer services at a lower cost to the consumer.
While this model allows both web sites and consumers the benefit of advertiser spending, it does rely on a commitment from web-sites and other merchants. Sites on the Internet need to recognize the importance of consumer privacy while developing a relationship with the consumer. When a web site requests consumer information, they need to be clear about how that information will be used and provided with a choice before they submit any personally identifiable information.
MatchLogic defines personally identifiable information as any information that pertains to an individual's name, mailing address, E-mail, phone number, social security number or any other form of identification that could readily be associated with a specific individual. It should be clear that a consumer must volunteer their personally identifiable information before a site to can gain access to that information. A cookie or any other technology cannot capture this information without the consumer physically offering it to a site.
Many privacy advocates associate cookies as a potential risk to the protection of personally identifiable information. This is simply not correct. A cookie is a piece of information that is sent from a web site or centralized server to a consumer's hard drive. It may contain information on a user's computer, an expiration date, path and domain name. The New Hacker's Dictionary likens it to the mundane ticket a consumer gets from the dry cleaners. When they return their clothes, the dry cleaner matches up the tickets to ensure they get the right stuff back. Sites cannot capture any other information without a user's consent. It should also be clear that a cookie can only be recognized by the server that issued it. Company A cannot read Company B's cookies.
As web sites request personally identifiable information about a consumer, they can then associate that information with a cookie. This allows a site to store passwords for consumers and recognize their personal preferences. In turn, sites may then design and deliver preferred content to the consumer. This allows both sites and advertisers the ability to create a more seamless and enjoyable experience for an Internet user. As it pertains to personally identifiable information, complete disclosure on behalf of the web site and consent on behalf of the consumer at the point of collection is necessary.
Presently, there is little conformity in the way a site discloses its information collection practices. Models created by "good faith" actors have provided consumers with information and standards are being discussed among various organizations. These standards may provide technological solutions to some questions of disclosure, but web sites still need to be given an opportunity to demonstrate their willingness to support consumer concerns.
Industry has been given the opportunity to present its position on privacy to the consumer through the recently launched TRUSTe program. Conceived by the Electronic Frontier Foundation and CommerceNet, TRUSTe has evolved to become the first organization to offer both merchants and consumers a system that provides clear explanations of privacy policies. Using a branded "Trustmark" system, users are given information about merchant privacy policies and how consumer information will be used on their site.
TRUSTe provides a strong foundation for a relationship between the web site and consumer. The commitment by MatchLogic to become a Premier Partner of TRUSTe along with other quality companies (AT&T, Oracle, CyberCash, Tandem, Wired, InterNex, Netscape, Entrust Technologies, Lands End, The Boston Consulting Group, IBM, NCSA, VeriSign, Progressive Networks and Excite) demonstrates a leading role as a supporter of online privacy. TRUSTe has estimated that several hundred other web sites are expected to join their organization before the end of the year. This will obviously increase the practice of disclosure by leading web sites.
To further facilitate the relationship between MatchLogic and the consumer, a web site has been designed that is dedicated to educating the consumer about privacy issues online called Preferences ( HYPERLINK http://www.preferences.com). The intention of this site is to always inform and empower the consumer. By going to this site, consumers can learn more about the technologies MatchLogic uses and how it relates to them. It also provides them with a means to opt-out of the MatchLogic database if they choose.
Web sites need to provide the consumer with as much information as possible. Informed consumers will then recognize trustmarks, and other forms of disclosure, and weigh the costs and benefits for providing information to a web site online.
Without providing consumers with the proper disclosure, consumer confidence and spending online will not increase substantially. In a recent study by the Boston Consulting Group for TRUSTe, "BCG estimates that as much as $6 billion in additional electronic commerce revenue could be generated by 2000 if consumers' privacy issues are addressed." (1996 Online Advertising Report: Web Strategies, Advertiser Case Studies, and Market Projections, Jupiter Communications Company, 1996, page 11.)
However, the opportunity for web-sites to increase their revenue online is very dependent on providing advertisers with information about their audience. Jupiter Communications stated that "online ad spending will double yearly over the rest of the decade, totaling $5.0 billion in the year 2000." This is largely dependent on the web sites' ability to provide advertisers with information about their audience. If web sites are forced to rely more on a subscription-based model for revenue, their revenues are diminished by 400% and the cost is passed on to the consumer. (1996 Online Advertising Report, page 11).
Both ad spending and electronic commerce can increase by encouraging industry to adopt standards like those supported by TRUSTe. Consumers will gain more faith in how web sites manage their information online, and advertisers can learn more about their target audiences without infringing on the privacy rights of individuals. As many leading companies on the Internet adopt TRUSTe guidelines or similar corporate guidelines, consumers should develop more comfort with online transactions.