1 in 3 have entirely stopped doing business with certain online companies due to privacy concerns.
By Alexandra Ross (Senior Counsel, Paragon Legal)

Do online and mobile businesses that utilize robust privacy and security practices enjoy a competitive advantage? In these areas of technology where clear legal guidance is still emerging, how should companies make strategic decisions regarding their privacy practices? Well, a few recent privacy studies may help answer these questions and build the business case for privacy.

Over the past several years, we’ve seen regulators, privacy watchdog groups and the press focus their attention on privacy. Now, more aware and educated consumers are determining how and when to engage with business in part based on their level of trust regarding the business’ privacy practices. For the most productive discussions regarding privacy compliance efforts in your organization, incorporate the customer feedback below, in addition to the impact of current privacy laws, regulations and industry self-regulatory guidance.

Truste, a global privacy management solutions provider, recently released the results of its Consumer Privacy Index for Q2 of 2012. The survey, conducted by Harris Interactive, tracks Consumer Concern, Consumer Mistrust and Business Impact. According to the study, high consumer concern and mistrust are prevalent and companies without good privacy practices may sacrifice customer trust and loyalty.

The survey notes that Consumer Concern is extremely high, with 91% of U.S. adults worried about their privacy online. When asked “How often do you worry about your privacy online,” 23% responded “always”; 22% “frequently” and 46% “sometimes”. Interestingly, college graduates, parents with teens and full time employees are among the demographics most concerned about their privacy – something for your marketing and data analytics teams to ponder.

In terms of Consumer Mistrust, 53% of U.S. adults do not trust online businesses with their personal information. In responding to the statement “I have complete trust that companies protect my personal information online”, a mere 9% “strongly agree”, while 38% “somewhat disagree” and 15% “strongly disagree.” Most telling is the response that 93% of U.S. adults believe that businesses have a responsibility to protect their privacy online.

The survey concludes that Business Impact is extremely high, with 88% of U.S. adults responding that they avoid companies that do not protect their privacy. More educated U.S. adults are more likely to avoid businesses that ignore privacy issues – 92% of college graduates, 86% with some college and 85 % with high school or less education. It follows that technology companies that wish to strengthen and advantageously position themselves amongst competitors must seriously consider customers perception of their business accountability and the reliability of their privacy practices.

This survey dovetails with two other recent Truste research reports – the U.S. Consumer Data Privacy Study, also conducted by Harris Interactive in June 2012 and a Mobile and Behavioral Advertising Study. The Consumer Data Privacy Study reinforces the point that customer concern regarding online privacy is widespread and leads to lower engagement with less attractive businesses (those with somewhat suspect privacy practices).

94% of consumers consider online privacy important and think about it often. Privacy concerns are on the rise with 60% of those surveyed more concerned today than a year ago. Significantly, 1 in 3 have entirely stopped doing business with certain online companies due to privacy concerns.

Editor’s note: Got a question for our guest blogger? Leave a message in the comments below.
Photo credit: Dave Hoffman on Flickr.
About the guest blogger: Alexandra Ross is Senior Counsel at Paragon Legal, working onsite on a project basis with clients such as Avon. Previously, as Associate General Counsel for Wal-Mart Stores, she managed privacy law and compliance for domestic and international ecommerce, marketing, social media and mobile initiatives. She is a certified information privacy professional and practices ecommerce and privacy law.