|Online Profiling Project - Comment, P994809 / Docket No.
(1) What types of companies are engaged in online profiling or in the development of online profiling technologies? What are the relevant business models?
The list of companies that use online profiling - or data mining --is endless, since new internet companies are born daily. Major retailers, selling everything from apparel to cars to appliances, use data mining to follow sales trends and consumer fads. Financial institutions use data mining to weed out their least profitable customers while retaining the most profitable. Insurance companies use data mining to determine if a potential client is "high risk." The list goes on and on.
(2) What types of information are currently being collected by online profiling companies from or about Web site visitors?
Data mining organizations, as employees of businesses, look for information relevant to the survival and growth of those businesses. A retail business uses this mined data to answer some questions, such as: What products are being purchased, what products are largely ignored? What are consumers willing to pay for these products? What age group/demographic is attracted to this purchase? Other relevant information may include the location of the purchaser - city, state, or country. The time of the purchase may also be important.
(3) What technologies do online profiling companies use to collect information about consumers? Please describe how these technologies function.
The most common technology involved in online profiling is the use of "cookies." Cookies are text files placed on users' computers to store information about their online activities. Cookies can be found on the hard drive as a text file, such as cookie.txt. A cookie can't read your hard drive to find out who you are or other personal information. But if you provide that information to a site, the site will save it to a cookie. Essentially, cookies are a way for websites to associate information with a particular computer by storing information on the computer for later retrieval. In this way, cookies are used as tracking devices to help the people gathering information - namely, the data mining companies.
(4) Do these technologies currently enable creation of anonymous profiles?
Yes, it is possible to generate an anonymous identification associated with a user profile without tying the profile to a specific person. For example, a company named WebTrends practices data mining in a realm where privacy is not an issue. WebTrends records all transactions on a web site. In print form, these records would amount to miles of paperwork in "computerese." Instead, WebTrends analyzes the list and reports in an easy-to-read a graph form. This is the company used by ePromoSales.com to gather relevant collective information. At ePromoSales.com, we use this information to assist our customers. We believe our business transactions are "meetings of the minds."
(5) Do these technologies currently enable the creation of consumer profiles that identify individual consumers? Do the profiles include information originally collected anonymously but later linked to an individual? Are online profiling companies currently creating such profiles? Are there technologies in development that will enable the creation of consumer profiles that identify individual consumers? If so, please describe.
The only way to identify an individual user is if a user volunteers personal information. The only other information a web site gains from a user is an email address, which may or may not include a name, and which may be changed at the user's discretion. Another way to track a user is by the computer's IP address. The average home computer user should not be alarmed about this, as the IP address is assigned randomly with each dial-up. EpromoSales.com employs the use of a firewall - all computers in the building go through one port. Therefore, outside users on the internet sees our entire building as one computer.
A recent survey by AT&T found an overwhelming majority of internet users to be "very concerned" about the privacy of the internet. Most likely, these fears have very little to do with data mining. Tales of credit card numbers and identities being stolen are the results of hackers, who target a specific computer for their nefarious schemes. This is, of course, an unfortunate occurrence; it is essentially the same as a stolen wallet or being robbed at the ATM.
(6) How is the information collected by online profiling companies used?
Information collected by online profiling companies is used to help a business know who its customers are or, often more importantly, who they are not. Data mining companies use algorithms to find hidden patterns, relationships and correlations in seemingly unrelated data. These results help a business discover customer preferences, profiles, and trends.
(7) Is the information collected by online profiling companies being merged with other databases? If so, what kinds of information are included in such databases? How is the merged information being used?
Yes, collected data is merged or shared with other companies in a partnership. For example, some large web sites are parents for other, smaller web sites. These web "families" share user information between themselves. At e.PromoSales.com, we are not interested in sharing our data with anyone. Our relationship with our customers is permission based and our data only serves for the purpose of predictive marketing. For example, if a customer has purchased a product from us in the past, we would like to notify that customer of a sale on that same merchandise in the future.
(8) What are the costs and benefits, to both industry and consumers, of online profiling?
The costs, for both businesses and individuals, come in the form of fraud and fraud attempts, which could drive up liability insurance premiums.
A business could benefit by being able to refine its goods and services, such as merchandise stocking. They would be able to reduce out of stock merchandise or overstocking, which results in forced markdowns. They would be able to make reliable future predictions based on past events. Another benefit would be to protect the business from consumers with high credit risks.
Consumers can benefit from cookies on their computer hard drives. For example, a consumer would be able to personalize frequently visited web sites, and the site would "remember" those preferences. The search engine Yahoo is one of many online companies offering this personalization; users are urged to utilize an option called "my yahoo." Consumers can also benefit from online profiling. The more a company follows consumer trends, the more in touch a company is with what the consumer wants.
(9) What are the consumers' perceptions about online profiling? Please provide the results of any studies or surveys addressing this question.
A recent Boston Consulting Group (BCG) consumer survey found that 76% of users were concerned that they were being monitored while browsing the internet, and 70% were worried about making purchases online. Again, these worries stem not so much from the practice of data mining as from the fear of theft at the hand of internet criminals.
(10) What are the beneficial uses of the information collected by online profiling companies?
See question 8.
(11) Are consumers' privacy interests implicated by the collection, compilation, sale and use of information collected by online profiling companies? If so, please describe.
Once a consumer gives out credit card or other personal information, the information is essentially out of the consumer's hands. It is up to the consumer to choose a secure web site with which to conduct business. EpromoSales.com provides consumers with other tools, such as the Better Business Bureau Online (BBB Online), TrustE, and alternate payment options, such as InstaCash, a provision of CyberCash. CyberCash provides consumers with the highest level of security through encryption.
(12) Do online profiling companies disclose the ultimate uses of information they collect? If so, what is the nature of such disclosures? Where possible, please provide examples of such disclosures.
Companies review the results of data to see how they can improve their companies or their relations with clients. At EPromoSales.com, we want to stay in touch with our clients to ensure the quality of our past business and instigate future business.
(13) Do online profiling companies provide effective mechanisms for a consumer to remove his or her information from their databases or otherwise control the use of such information?
There is really no way to remove information from an online profiling database. Consumers can request to be taken off of mailing lists, and can also remove cookies from their hard drives.
(14) Do online profiling companies provide consumers an opportunity to choose whether and how their information will be collected and used? If so, please describe the choices that consumers are given and how consumers can exercise these choices.
Consumers' information is collected voluntarily. If a consumer has any doubts, they should not volunteer information until they have researched the company. More and more web sites give consumers the option to check a box if they would like to be contacted or placed on a mailing list. EpromoSales.com utilizes such opt-in mailing lists.
(15) What is current industry practice, with respect to information already collected from individuals, when there is a later change in the company's policies? What is the current industry practice, with respect to information already collected from individuals, when there is a material change in the corporate structure or business contracts governing such information, such as through a merger, joint venture, or sale of customer lists? Do online profiling companies provide notice and choice with respect to how already-collected information is handled under changed circumstances?
The current industry practice for the collection of information is permission based. This has been and will continue to be the position of ePromoSales.com. If the policy changes, the information cannot be recycled or reused. At e.PromoSales.com, privacy is paramount to the success of our business.
(16) What, if any, legal or other practical issues would be implicated in the creation of effective self-regulatory programs to govern the sorts of changed circumstances described in question 15?
The only practical way to implement a self-regulatory is on an industry-wide basis. EPromoSales.com with Starbelly.com practices self-regulation through our online promotional products trade association, The Ethic in Business on the Internet Group (eBIG). We are also a member of the American Association of Advertising Agencies (AAAA), which has set a standard of practice for the advertising industry.
(17) Do online profiling companies provide consumers the opportunity to see what information has been collected from or about them and the ability to correct errors? If so, please describe.
At this time, it is not possible for consumers to remove their information, but more importantly, there is no reason for it. There is no way to tie any information to a human being with the exception of two easily changed items: email address and IP addresses.
(18) What procedures have online profiling companies instituted to maintain the security of the information they collect?
Information collected by large companies through their web sites is stored in the company's database. What the company decides to do with this information, of course, varies. At EPromoSales.com, we value our customers and, therefore, our customers' privacy.
(19) What self-regulatory efforts have online profiling companies undertaken to address concerns raised by their collection, compilation, sale, and use of consumer information? How do these efforts address the fair information practice of notice, choice, access, security, and enforcement? What are the costs and benefits, to both consumers and businesses, of such self-regulatory efforts?
In April 1998 several large online companies including AOL, IBM, Microsoft and Hewlett Packard, joined together to form the Online Privacy Alliance, citing a need to protect the privacy and interest of consumers. EPromoSales.com later joined this alliance to foster the security of our clients.
EPromoSales.com is a member of the American Association of Advertising Agencies (AAAA) and ascribes to the association's standards of practice. Namely, this includes an obligation to our clients, our public and the media we employ. Unethical practices are to the detriment of everyone involved, undermining and weakening future public confidence and business success.
EPromoSales.com, in association with Starbelly.com, has formed an online promotional products trade association called The Ethics in Business on the Internet Group (eBIG). Through this association we hope to promote a standard of fidelity and excellence within our industry.
The internet has numerous other privacy watchdogs whose services are available to businesses. For example, the Better Business Bureau Online is a voluntary self-regulatory program designed to promote trust and confidence on the internet. The BBB has thousands of Reliability Approved Participants and adds more companies to this list every day. Also, companies such as TrustE.com encourage "mutual trust and openness," along with hints for the consumer in the form of do's and don'ts, and information about parental control software for children.
(20) Are there any efforts currently underway or planned to educate consumers and businesses about online profiling? If so, please describe.
The issue of online profiling has been a hot topic in the media. The internet itself is full of information intended to educate the consumer. The American Association of Advertising Agencies offers seminars and discussions for individuals and businesses, and we are hopeful that other associations will follow the same route.