Privacy legislation


A moral right of individuals to avoid intrusion into their personal affairs.

Identity theft

The misappropriation of the identity of another person, without their knowledge or consent.

Privacy refers to a moral right of individuals to avoid intrusion into their personal affairs by third parties. Privacy of personal data such as our identities, likes and dislikes is a major concern to consumers, particularly with the dramatic increase in identity theft. According to the Guardian (2003a), quoting the Credit Industry Fraud Avoidance System (CIFAS), the UK's fraud prevention service, it is the fastest-growing white-collar crime, generating a criminal cashflow of £10m a day. In 1999, there were 20,264 reported cases of identity theft in the UK; but by 2002, that figure had reached 74,766, and in 2003, the figure was 101,000. Identity fraud involving credit and debit cards rose by 45 per cent in 2003.

Yet, for marketers to better understand their customers' needs, this type of information is very valuable. Through collecting such information it will also be possible to use more targeted communications and develop products that are more consistent with users' needs. How should marketers respond to this dilemma? An obvious step is to ensure that marketing activities are consistent with the latest data protection and privacy laws. Although compliance with the laws may sound straightforward, in practice different interpretations of the law are possible and since these are new laws they have not been tested in court. As a result, companies have to take their own business decision based on the business benefits of applying particular marketing practices, against the financial and reputational risks of less strict compliance.

Effective e-commerce requires a delicate balance to be struck between the benefits the individual customer will gain to their online experience through providing personal information and the amount and type of information that they are prepared for companies to hold about them.

What are the main information types used by the Internet marketer which are governed by ethics and legislation? The information needs are:

1 Contact information. This is the name, postal address, e-mail address and, for B2B companies, web site address.

2 Profile information. This is information about a customer's characteristics that can be used for segmentation. They include age, sex and social group for consumers, and company characteristics and individual role for business customers. The specific types of information and how they are used is referenced in Chapters 2 and 6. The willingness of consumers to give this information and the effectiveness of incentives have been researched for Australian consumers by Ward et al. (2005). They found that consumers are willing to give non-financial data if there is an appropriate incentive.

3 Behavioural information (on a single site). This is purchase history, but also includes the whole buying process. Web analytics (Chapter 9) can be used to assess the web and email content accessed by individuals.

4 Behavioural information (across multiple sites). This can potentially show how a user accesses multiple sites and responds to ads across sites.

Table 3.1 summarises how these different types of customer information are collected and used through technology.

Table 3.1 Types of information collected online and related technologies

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