Privacy Premium Doesn't Faze BuyersPrivacy Premium Doesn't Faze Buyers
June 7, 2007
We know now that users will stay away from sites that have had a security breach. But will they pay more to buy from sites that promise to do a good job of protecting their privacy? A new study says they will.
For years, e-commerce experts have been buffaloed by conflicting research about users' attitudes toward privacy, Cranor explains. "On one hand, there have been many studies in which respondents say they care deeply about their privacy," she says. "On the other hand, there have been lots of studies in which online respondents have been willing to give up their personal information for a candy bar or a few dollars."
Some experts have postulated that this paradoxical behavior simply shows that users don't know how to read privacy policies or rate the practices of the sites they visit, Cranor notes. "Consumers aren't going to wade through 10 pages of legalese to find out whether the site sells its user data to others," she says. "It's not that they don't care, it's just that the cost of figuring it out is too high."
To test this hypothesis, the CMU researchers asked users to make online purchases through Privacy Finder, a special search engine developed by Cranor and her colleagues. Using the industry standard Platform for Privacy Preferences (P3P), Privacy Finder harvests data from a Website's privacy policies and matches it to a user's preferences.
After getting a short explanation of what the green boxes meant -- for example, that a particular site does not sell its users' data or use it for telemarketing -- many of the test users chose to purchase their products from sites that showed up in green, even if those products were slightly more expensive. On average, the users paid about 60 cents more than the lowest price in order to get the privacy assurances on two $15 purchases.
If no icon was shown, the test subjects tended to simply buy from the site that had the least expensive option, according to the study.
The CMU research team is planning to test the idea in a larger laboratory study, and eventually, in the field, Cranor says. But the initial results indicate that companies with strong privacy policies could be using them more effectively to separate themselves from the competition.
More than 20 percent of e-commerce sites are now using P3P, a technical standard for creating machine-readable privacy policies, according to CMU research. P3P extracts privacy information written in XML, making it easier for devices to quickly determine whether they may be dealing with a server that doesn't do a good job of protecting their privacy.
"We're seeing a pretty good uptake of P3P in the major Websites," Cranor reports. "What's missing is a way for users to somehow tap into that data to find out what they want to know about a site's privacy."
Privacy Finder accesses that data and displays it as a simple icon that consumers can use to determine whether a site may use their data in an objectionable way. The search engine is available to any consumer who wants to test it out.
Over time, the CMU researchers hope that major search engines might adopt the Privacy Finder technology. "We've pinged them, but so far they've shown only a little bit of interest," Cranor says.
— Tim Wilson, Site Editor, Dark Reading
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