COMMENTS OF RAM AVRAHAMI CONCERNING CONSUMER ON-LINE PRIVACY-P954807
15 April 1997
Attached please find comments for the Data Base Study (P974806) and the Consumer Privacy 1997 Workshop (session two only), as well as attachments 1-11 And a diskette carrying most file in a Word 7.0 for Windows format.
I would like to state the following parties as sharing similar interests to mine, although not necessarily having the same position and none actively supports the property and economic issues as I do. Some of the parties mentioned below may have not submitted comments to participate in the workshop:
EPIC - a leading privacy group in the electronic
Private Citizen Inc. - a company that helps people
fight junk mail and junk calls.
JoAnna L. Brunk - a strong participant in the FTC
online privacy discussion group. She has a good web site
that details databases with personal information.
I am looking forward to be invited to participate in the FTC workshop and be able to contribute there for the important subject of privacy.
Consumer Privacy 1997 - Request to Participate, P954807
Ram Avrahami - 4/15197
In addition to everything that was discussed about the market in personal information (see below a portion of my request letter to the first session, covering those issues), the Internet environment provides a much stronger argument against practices that are not as troubling in the physical world. Specifically, the practice of email solicitation is becoming a major problem and annoyance to consumers. The ability of any individual to take the time of millions of others without accountability is scary. The Internet forces us to look at the exact costs and incentives of each party, and the rough opt-out methodology just does not work in that environment. This is another reminder to the fact that the market of personal information is structurally flawed.
In this environment, I have an unparalleled experience, trying to provide a service that is good to consumers and good to marketers. Together with Private Citizen, Inc., who does similar actions in the mail and telephone world, we started registering email addresses of people who do not want to receive any email solicitations. This is simply an opt out system.
Our registered members forward us email solicitations that they receive. An analysis on a sample of those messages is attached<8>. Using these solicitations, we have approached hundreds of mailers and offered them that we will remove from their lists the names of people who explicitly stated that they do not want to receive solicitations. This service is offered for free.
Some mailers agreed to the service (and later stated that indeed they received less flames and less returned messages). Some said that they are not interested, because they believe in the first amendment or otherwise. The majority preferred not to answer at all.
While we do believe that there is a possibility to improve the service and the response rate, it is clear that as long as email solicitations are legal there will be people who will use them regardless of industry guidelines or consumer desires. It is also certain that for most companies now utilizing email marketing, consumer desires play second fiddle, if at all, to their own commercial needs.
I would like to participate in this session, to be able to share my experience on line, as well as show the similar arguments that can be drawn between the first and second sessions.
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 Email solicitations and also on the general flaws in the personal information market.
I would be honored to be invited to participate in the FTC workshop in this session.
COPY OF PORTION OF THE REQUEST LETTER TO SESSION ONE:
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.
Consumer Privacy 1997 - Comment P954807
An online poll <9> found the following attitude of consumers regarding the collection of their personal information:
Industry guidelines are not effective. Unrespectable companies do not use them and respectable companies use opt-in mechanisms. The guidelines leave the decision in the hands of companies, so this situation is not likely to change. In the meanwhile, consumer information is spreading without control.
Unsolicited Commercial E-Mail
Commercial email is quite widespread and is growing fast. While a year ago only a few received such messages, today only few have not. AOL members, in particular, are bombarded. I have dormant AOL accounts that I never use, but they still receive junk email. The subjects of the solicitations too are diversifying and becoming more main stream. While the first solicitations were only get rich quick schemes, (and they are still the largest category of the offerings), there are many more of real products, from cold capsules to magazines.
The privacy concerns relate to the way marketers receive the email address to send the messages to, and if any other information about consumers was used to reach some sort of targeting in the mailing. In that sense, the more targeted the mailing, the greater the privacy concern is.
Addresses are often collected from the Internet. Traditionally this has been through public news groups. Newer methods are the collection from directories (like AOL member directory), from mailing lists (which are not posted, but the extractor subscribes to the list and receives all the messages too), or from web pages. Another source of email addresses is ISP's selling their customer lists. This is more common when the lists are provided to an online directory.
For commercial entities the benefits are obvious. They can reach a large market with almost zero cost. While access through traditional channels costs a few pennies per impression or more, Internet marketing can reach cost of merely $0.0001 or less per impression (less than $100 per a million recipients).<10> This is significant cost reduction and is especially attractive to small and home businesses, who do not have the money to approach a larger market otherwise. Unfortunately, those smaller firms also are not so afraid to annoy the large market, because their costs will be covered by the few who would want their service.
For consumers attitude -- best is to let them speak for themselves. Attached <11> is a list of comments by consumers about junk email. These comments were submitted as free text comments while signing an on-line petition to privacy Congress.
The biggest cost often neglected, is consumer time. Sure, it is possible to delete a message quickly, but it does take a few seconds and those seconds add up to a heavy burden if unaccounted. The amazing ability of the Internet to send information with little or almost no cost creates a tool in which each person can broadcast his or her own message to everybody else without any cost This means that any person on the Internet can grab attention from literally millions of other Internet users without any accountability and compensation for their time.
Let's look at a numerical example:
Assuming it takes the average recipient about 5 seconds to read an incoming message, understand that it is a solicitation and delete it. (this is a conservative estimate). Lets assume also that the average recipient earns $10/hour (again, conservatively compared to the demographics of the Internet community).
Therefore, a mailer that sends out 1 million messages will take 5 million seconds from their time or about 1,400 hours of their time, that can be valued at $14,000.
This is a real, even if unaccounted, cost to society. But if the person is on a pay-by-time service, as AOL and many other services use, then a connection charge of $3/hour (on average) can be added to the cost. This adds $4,200 to the cost of the recipients, and these are real dollars that consumers pay rather than the opportunity cost of their time.
Costs for internet service providers and the network are also real, and are likely to be provided by those parties.
While consumers can receive an internet account with unlimited connection time (theoretically eliminating the $3/hour charge), it is important to understand that the pricing of the service does not change the economics. If everybody used unlimited access accounts and ISP would see that the average traffic increases because of the many solicitation, they would increase the price for the connection to everyone, thus still passing the cost to the consumer. As long as we attempt to build an economically viable system, the use of flat pricing can mask the real costs but not eliminate them. Thus, the $3/hour and not flat pricing is the best estimate for the consumer cost from receiving the solicitations.
Of course, the cost of time for consumers, which is even higher, is not affected by connection pricing either and can only be reduced if consumers do not receive the solicitations in the first place.
An analysis performed on email solicitations in 3-4/97 <8 > reveals that at least 70% of mailers do not bother to send any remove instructions. 50% say nothing, while about 20% state that this is a one time mailing, and thus requires no remove procedure. Most of those "one timers" are likely to send another "one timer" later., and even those who provide remove language do not necessarily execute it (as many consumers complained to us).
There is also not much care about the contact information for the mailer. Over 30% use email addresses that on the face of which look forged. A significant, yet unmeasured portion of the addresses who look real is also likely to be inaccessible.
Study of 331 spam messages received 3-4/97 from dozens of consumers from all over the Internet.
Categories of Solicitations.
MLM / Make Money Fast 93 28.10%
None 175 52.87%
Apparently forged 104 31.42%
Public Opinion Poll
Poll Results - February 1997
Ownership of Personal Information
Direct Marketing, Past and Future
MPS (Mail Pref. Service): 70.4% --20.3% --7.3% --2.0%
9. Do you believe these Preference Services are effective?
10. Do you believe these Preference Services should be expanded, to allow you to select specific categories of products and services to receive solicitations, while blocking the rest?
Personal Information on the Internet
11. What right have companies to conduct, on their web site, uninformed tracking on visitors?
12. Should companies be allowed to collect customized information on individuals based on their (passive) membership in a public discussion group?
13. Should companies be allowed to collect customized information on individuals based on their (active) posting in a public discussion group?
Kbrousseau@aol.com, 10:34 AM 4/14/97 , Fwd: 1 Million E-mail Addresse
1 Million E-mail Addresses for only $24.95
This is the lowest price for a million e-mail addresses on the internet -- GUARANTEED !!!
Are you interested in marketing your product or service via bulk e-mail?
Why pay more? How do you know your venture will even be successful? Don't lose your shirt paying as much as $300 for what you can get for only $24.95...
What most of the "sheisters" on the net won't tell you is that bulk e-mail isn't always successful. They promise success ratio's of up to 18% when in reality it can range from one sixteenth of 1% up to as high as 2.5% to 5% at the very most if your ad and product/service are exceptionally good.
>They say that their lists are 100% deliverable. What a lie!!<
People cancel e-mail accounts every single day. America Online members cancel quite frequently. As soon as someone cancels their account, that e-mail address becomes undeliverable. I know my list isn't 100% deliverable which is why I have enclosed 1,250,000 e-mail addresses. I know there is going to be at least a 25% undeliverable ratio so I give you extra to compensate.
------------------------- HOW TO ORDER -------------------------------If you are interested in purchasing my 1 Million E-mail Addresses for only $24.95, simply send a check or money order for $24.95 payable to Leon McCreary at the following address:
(Make sure to include your current e-mail return address)
**** Enclose only $45.95 for 2,500,000 E-mail addresses****
I will then send to you the following:
Sincerely and respectfully yours,
P.S. I truly believe in the mass e-mail or bulk e-mail concept. Many people frown upon it. However, it is my belief that if the industry can become more reputable through better products and faster customer service, it may become more accepted. Mass e-mail is free to send, and it enables people like me to advertise until such time as we have the money to advertise through other media.
We all have dreams. I am reaching for my own as I am sure you are striving for yours. If I can help you achieve your dreams and goals in the process, please allow me to do so. Good luck !
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From email@example.com Fri Apr 4 19:32:39 1997