Privacy at any price! Strategy Magazine March 05, 2002

Anybody here seen my old friend “accountability”?

The one thing traditional direct marketers can now say about the dot com world is that it provides an opportunity to validate many of the strategies and policies that have guided profitable companies for many years. Now that profitability is coming back into fashion, maybe we’ll start to hear more about how that happens. In the meantime, the dot coms are learning  some old lessons the hard  way. Lessons learned long ago by traditional direct marketers and list owners. Such as privacy policy. The difference now is that the issue of customer privacy is further complicated by the issue of company bankruptcy.

As a consequence,  it may be time to really start seriously worrying about the potential for government intervention in privacy. But, guess what, it may not be in the form of legislation. The government may just sue you. That day came recently for toysmart.com.

In early June, the company filed for bankruptcy protection and authority to sell its assets by public sale. The assets were split into the expected categories including leases, furniture and equipment, software and operating systems. An additional category included web site applications, trademarks, product designs and customer lists and related information. Because this was a public sale, the assets were listed in the Wall Street Journal and….  The public nature of the process brought the issue to the attention of the companies own privacy …mark licensor, Truste. With overtones of government sanction, Truste  has established itself as a leader in authenticating the privacy polisies of the companies whish are licencees. By offering the customer list and related information as part of a public sale of assets of the bankrupt operation, toysmart.com  stumbled over their own privacy policy, the policy they had paid Trustee to endorse. Truste, viewing the sale as an attempt to pass customer information to a third party without customers’ consent, began its stated process of dealing with the situation. First, trying, unsuccessfully, to make contact with toysmart executives. In the frenzy of dealing with a crumbling company, no doubt toysmart executives thought messages from Trustee were the least of their worries. Their mistake was forgetting the process their license gave leave to Truste to pursue….alerting the FTC and suggesting that the potential sale mioght be classified as unfair and deceptive marketing practices. The FTC agreed, and sued to prevent the sale of the database.

Parent company, Disney, has very quickly stepped in to stem a potential public relations nightmare resulting from the situation. But, let’s look at what went wrong.

  1. Remember to never say never — Users have a right to informed consent; and   No single privacy principle is adequate for all situations Two cornerstone principles that govern the TRUSTe program: Let your own self-regulated privacy policy back you into the corner of unfair and deceptive business practice
  2. Right hand/left hand     One size rarely fits all. One of the two cornerstone principles of Truste is that “No single privacy principle is adequate for all situations”. While toysmart’s policy worked really well to bring    Self-regulation in response  to fear of legislation      “When you register with toysmart.com, you can rest assured that your information will never be shared with a third party.”
  3. “All information obtained by toysmart.com is used only to personalize your experience online.”
  4. Stating a privacy position
  5. It’s not about protecting customers’ privacy. It’s about ethics. Now, there’s a concept.
  6. Jumped on the TRUSTe bandwagon but didn’t read the fine print
  7. Need to overcome consumers’ reluctance to purchase on-line
  8. Privacy policy for the wrong reasons
  9. And, now a few short years later, enter the privacy policy backlash.
  10. Closely followed by the Truste initiative, which, as the name suggests, was designed to provide a “seal of approval” around a licensee’s treatment of customer information. And, conversely, provide reassurance to consumers that certain expectations would be met.
  11. Treat privacy as policy not promotion.  In the headlong rush to e-commercialism, one of the early dot com challenges was overcoming consumers’ distrust of doing business online. Enter the notion of privacy policy. The thought was it would encourage people to buy—didn’t .
  12. Toysmart.com’s mistake was 2-fold. Tried to package up the customer list with its trademarks, goodwill, URL names
  13. Honor your  stated privacy policy

How many retailers are really concerned?  Now, many many more.

Charles de Gruchy remembers how it was

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