Clear privacy practices boost trust and online sales for Internet companies

Internet companies can boost sales and build trust with online shoppers by providing clear and readily available privacy disclosures, according to a recent UC Irvine study.

“Surveys have demonstrated that online shoppers are concerned about their privacy, specifically about the confidentiality of the personal data they provide to Web retailers,” explained Alfred Kobsa, author of the study and professor of informatics in UCI’s Donald Bren School of Information and Computer Sciences. “To allay these concerns, many Web sites include a link to their online ‘privacy policies,’ which describe how the retailer treats the personal data of customers. Even comprehensive privacy notices that should reassure readers are, however, often written in a lengthy and legalistic manner, and in effect, hardly ever read by Internet shoppers.”

Pursuing an alternative approach, Kobsa, who is also a faculty associate of UCI’s Center for Research on Information Technology and Organizations and of the Institute for Software Research, partnered with faculty from Humboldt University in Berlin to design Web page templates grounded in human-computer interaction research. In these design templates, every entry field for customers’ personal data is accompanied by a clear and concise explanation of how the retailer will deal with the respective piece of data, and what benefits customers can expect from sharing their personal information.

The result was that shoppers using Kobsa’s system bought products 33 percent more often than the group of shoppers presented with standard privacy policy statements. They were also 20 percent more willing to share personal data with the Web site, and rated its privacy practices and the perceived benefit resulting from sharing their data significantly higher.

The study was presented at the May 2004 Workshop on Privacy Enhancing Technologies in Toronto, Canada, and will appear in a book by Springer Press.

“At a time when consumer privacy concerns are at an all-time high – as proof in the recent enactment California’s Online Privacy Protection Act of 2003 (A.B. 68) – these preliminary results should aid online companies in the creation of their new policies,” said David Redmiles, chair of, and associate professor in, the informatics department.

Kobsa’s theory is currently being further tested with a second study involving a Web site of ‘average’ reputation. “The data coming in seem to indicate that the conclusion from the first study holds even more true for Web sites that do not have an excellent brand recognition,” said Kobsa.

A new California law, effective July 1, requires that companies operating commercial Web sites post privacy policies that meet a specific set of standards, including the conspicuous posting of the policies, the disclosure of categories of information collected and the types of third parties with which the collected information may be shared.

More information:
Professor Kobsa’s Web site template samples are available online at: http://www.ics.uci.edu/~kobsa

Details on the California Online Privacy Protection Act are available online at: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=22001-23000&file=22575-22579