Customer Privacy Concerns and Privacy Protective Responses

Abstract

Companies are increasingly collecting and using data on their current and potential customers to improve their CRM, sales, and service effectiveness. At the same time, they are faced with a growing reluctance of customers to disclose their personal information or to allow tracking of their behaviors because of privacy concerns. This chapter discusses the concept of customer privacy concerns and the respective implications for successful CRM practices. After introducing trends and underlying drivers of customer privacy concerns, this chapter sheds more light on the different governmental regulations concerning privacy in a cross-country comparison. Sections 14.4, 14.5, and 14.6 continue with presenting the underlying psychological processes and respective customer responses which are summarized in a comprehensive conceptual framework. At the end of this chapter, implications for a responsible privacy handling related to CRM are drawn.

Appendices

Appendix 1: Selected settlements in violation of FIP principles (Peltier et al., 2009)

FIP	Company/settlement date	Case
Notice/awareness	Centurion Financial Benefits (2007)	Consumers were told they were providing information for a $2000 credit card limit. Instead, they received an application for a scored value/cash card with no line of credit
	Sony BMG (2005)	Sent flawed and overreaching computer program via millions of music CDs that was officially intended to restrict the consumers’ use of the music. The program also could report listening habits and installed undisclosed and sometimes hidden files on computers that could expose users to tampering by third parties
	DoubleClick (2002)	Violated state and federal laws by surreptitiously tracking and collecting consumers’ personally identifiable data and combining it with information on their web surfing habits
Choice/consent	Bank of America (2007)	Disclosed consumers’ personal, private, and confidential information to third parties without consent
	Gateway Learning Corporation (2004)	Rented personal information, in violation of promises made in its privacy policy statement. After collecting consumers’ information, privacy policies were changed to allow sharing of information without prior notice or consent given by customers
	Cartmanager International (2005)	The FTC alleged that CartManager did not adequately inform consumers or merchants that it would collect and rent information and that the company acted knowing that it was contrary to the privacy policies of many merchants
Access	Quicken Loans (2002)	Failed to provide «adverse action» notices in violation of the Fair Credit Reporting Act and failed to comply with the provisions of the Act to notify the consumers when an action was based wholly or partly on their credit report
	Performance Capital Management (2001)	Provided credit bureaus with inaccurate «delinquency dates» for its accounts, resulting in negative information remaining on consumers’ credit reports. PCM failed to investigate consumer disputes referred by credit bureaus or notify bureaus when consumers disputed collection accounts
Integrity/security	Guidance Software (2006)	The FTC charged that failure to take reasonable security measures to protect sensitive customer data contradicted security promises made on the website. This failure allowed hackers to access sensitive credit card information for thousands of consumers
	ChoicePoint Inc. (2006)	Failure to take appropriate security measures to protect sensitive information of tens of millions of customers resulted in fraudulent purchases worth millions of dollars
	Microsoft Corp. (2007)	The FTC alleged that Microsoft did not employ reasonable and appropriate measures to maintain and protect the privacy and confidentiality of consumers’ personal information collected through its Passport and Passport Wallet service, including credit card numbers and billing information

Supplemental readings on customer privacy

European Union

► http://ec.europa.eu/justice/policies/privacy/index_en.htm

► www.privacyinternational.org

United States

► www.ftc.com

► http://www.export.gov/safeharbor/

► https://www.donotcall.gov/

Germany

► http://www.bfdi.bund.de/EN/Home/homepage_node.html

► http://www.robinsonliste.de/

Research/Reports

► http://blogs.wsj.com/wtk-mobile/

► http://www.digitalcenter.org/