Such verification has another benefit: the spread of best practices via firms that specialize in privacy and security methodologies. The ideal solution for commercial consumer privacy is to rely on market principles rather than blanket regulation. As background, consider the work of economist Ronald Coase, who won the Nobel Prize for this insight among others.
If you establish a right--whether it's for clean air, privacy, a pound of potatoes or a copy of a newsletter--that right will be allocated efficiently in a free market, regardless to whom it is worth more. In the context of privacy, the first question is whether Alice values her right to privacy more than WonderWidgets values the right to call her at home at 9 pm. If she does, she will effectively pay WonderWidgets for her privacy by foregoing the opportunity to receive a fee from the company.
On the other hand, if she values her privacy less, she may sell the privacy--the right to call her--to WonderWidgets for that amount. Unfortunately, those rights are not clearly defined. Second, they don't map easily to the pieces of data that we take to represent them: How does Alice distinguish between the right not to be called at 8 pm and the right not to be called at 9 pm--although they're based on the same telephone number? How does she control the proliferation of those rights de facto, information into the hand of others who might use it differently?
Does she need separate contracts with all the people who might possibly telephone her? The market works well with defined items, less well with slippery pieces of data that change value as they get combined or change hands. Is the right to the piece of data, or to particular uses of it? Indeed, when we say "privacy" we mean lots of things--everything from the non publication of information to control over exactly when one receives a telephone call. Does Juan mind if his information is in a data bank somewhere, unseen by prying eyes?
But he goes ballistic if he gets called after 7 pm. Alice, by contrast gets the willies when she thinks of her transactions being recorded anywhere and seen by others, but she doesn't really mind the phone calls since the callers don't seem to know much about her.
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One does not want to be disturbed; the other is concerned specifically about privacy as an information issue. Different people have different preferences for their own privacy. The point here is that each Website should cater to the specific preferences of its users, rather than all following the same rules. Some people object in principle to the concept of privacy as an assignable right--one that can be sold or bargained away.
They'd rather see it as an inalienable right, one the poor can enjoy as fully as the rich. But our principles tend toward maximum personal freedom--that people should decide for themselves how to value their rights. Since privacy is not an absolute, and individuals' preferences vary, it seems foolish to insist on an absolute approach.
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Fortunately, there are systems in the works not for privacy regulation, but for privacy disclosure and the labeling of data-management practices. Also, many Websites also have specific, disclosed privacy policies. It is up to the customer to decide on the value of his data and to act accordingly. The second, complementary effort is in an even earlier stage; it is the IPWG, a coalition of about 15 companies and organizations convened by Washington's Center for Democracy and Technology. The IPWG's Platform for Privacy Preferences P3 will be more granular, and will enable a way of representing specific privacy rules in computer-readable form.
The combination of eTRUST's approach to labeling and certification, and the IPWG's approach to representation and automatic negotiation, could end up as a powerful advance in Net civilization. These systems are contractual, and they can work without any changes in existing law. The initiatives described are grass-roots, and they are designed to foster a multiplicity of approaches to privacy management, rather than a Central Bureau of Privacy Protection.
The three levels of the Trustmarks are fairly simple:. No exchange: The site will not capture any personally identifiable information for anything other than billing and transactions. Individual usage and transaction data may be used for direct customer response only. Third-party exchange: The service may disclose individual or transaction data to third parties, provided it explains what personally identifiable information is being gathered, what the information is used for, and with whom the information is being shared.
Of course, the devil is in the details, or in the phrase provided it explains.
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What exactly will the service do with the data and to whom will it be provided? Probably not. Its goal is not to ensure universal privacy, but to get users to ask about and Websites to explain their privacy practices. The underlying assumption is that an informed market works better, and that customers need some guarantee that the information they get is true. Informed consumers can negotiate better deals individually, and shift the market towards more customer-friendly behavior in general. The Trustmarks call users' attention to the proposition that their data may be valuable and should be protected.
Then they need to read further to find out exactly what the vendor is proposing.
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An audit by an accounting firm is a much better way of fostering compliance than a lot of regulations. What is the role of the accounting firm? In an attestation review, the client makes specific assertions, which are then "attested" to by the independent auditor. These attestation reviews are governed by American Institute of Certified Public Accountants standards of practice.
For a Web-oriented client, the firm can support any of three stages: system design establish audit, control and security requirements , system implementation configure system and processes , and post-implementation assessment validate that the control system is well designed and works as intended. All three are ongoing: Systems must be reassessed and updated, and procedures must continually be refined both to combat erosion and to adjust to new technology--particularly in security, which is basically an arms race with malicious crackers and negligent employees.
Of course, an accounting firm cannot guarantee privacy. The presence of a third-party auditing firm adds elements of oversight and trust to the eTRUST program. Obviously, any accounting firm could do the same, but eTRUST is an education and branding campaign as well as a compliance system with licensed auditors. While it should cost very little to participate in eTRUST itself, it does cost a lot to be properly certified, just as it costs a lot to be audited, especially for a public company.
That's one of the realities of doing business. We can just hope that there will be vigorous competition in privacy attestation services as in other markets, and that supply will rise quickly to meet demand. Beyond that, eTRUST is still working out its precise business model; it cannot support itself during its first couple of years.
To the extent possible, we believe eTRUST should get its funds from the accounting firms--the people who get tangible revenue due to the program--rather than from the logo-posters. After all, the accounting firms have an immediate vested interest in the success of the project, although in the long run the logo-posters will find it useful in attracting customers.
Money flow is only one of the issues the pilot is intended to sort out. Exactly how much work does it take to test for compliance? How often should logo-posters' claims be spot-checked? What are the vulnerabilities? Are the logos and their explanations intelligible to users? What happens when someone fails in compliance? That's part of what eTRUST hopes to determine during the pilot and over the next year-- ideally without too many instances of non-compliance, but enough to show that the program is for real.
The initial steps are cancellation of the right to use the logo and posting the wrong-doer on a "bad-actors" list; of course, the wrongdoer has to pay the costs of determining its non-compliance and ultimately could be sued for fraud. But stiffer, quicker penalties may be needed: The conditions shouldn't be so onerous that no one signs up, but they should be severe enough to be meaningful.
Breaches are likely to be noticed through spot-checks by the third party attestors. Other sources of challenges are whistle-blowing employees or aggrieved users, although it's usually difficult to figure out who compromised privacy. The data processing requirements behind privacy protection are also challenging, since some data will need to be tagged to be used only in certain ways.
There will also need to be contracts specifying the sanctity of the data as companies form, merge and break up. Do the contracts governing the use of data survive a bankruptcy proceeding? They should. Its planned "product" is a technical standard called P3, for Platform for Privacy Preferences. The IPWG plans to produce substantial technical work later this year, but the first step is to come up with a vocabulary so people can accurately and explicitly describe what they want, to allow them to craft their preferences.
The group hopes to develop demos for user testing by May, and then the developers at W3C can take it from there for implementation. While content rating requires some formatting, its vocabulary is fairly free-form; any third-party rating service can establish its own terms and definitions.
By contrast, a privacy vocabulary is more complex, and needs a grammar for expressing conditional preferences.
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That will enable not just static labeling of privacy practices, but actual negotiation between a customer's self-described preferences and the options a site offers. Using P3, a user could specify what kind of privacy rules he wants to find or avoid, and his browser or other tool could implement those preferences automatically. A P3 program at the Website could describe its own practices and could also read a user's self-description.
The two agents would then negotiate the terms of a transaction. Special areas would be reserved for those willing to part with certain information.
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But as use of P3 spreads, users and sites could automatically negotiate far more complex interactions. Would users trust such an automated system? The user's and the site's choice of auditor or auditing scheme could of course be specified in the label.
How can these two complementary systems succeed? This question is of broad interest, since these two groups face the fundamental challenges of anyone trying to foster self-regulation in order to forestall government regulation. The government or the threat of government action may promote urgency.
The Federal Trade Commission is conducting a long-term Privacy Initiative and is planning a privacy workshop to study technical tools and self-regulatory models to protect privacy--an effort in the right direction. At the same time, the Commerce Department's National Telecommunications and Information Administration is compiling a report on the issues around privacy self-regulation.