FTC reports on privacy

Jul 01, 1998 9:30 PM  By

For the past several years, the online industry, catalogers and the Direct Marketing Association (DMA) have said that self-regulation of the Internet is more efficient than government regulation when it comes to protecting privacy. But the Federal Trade Commission put the industry to the test by conducting its own Website privacy audit in March. And on June 4, the results were released to the White House.

The bottom line? The findings were not what marketers hoped for. In a random survey of more than 1,400 commercial Websites, the FTC found that while 85% collected personal information from consumers, only 14% provided any notice about how that information will be used, and only 2% posted comprehensive policies. As a result, the FTC will recommend possible legislation for businesses by the end of the summer and has already recommended legislation to protect children online (placing parents in control of collected information).

“To date, the Commission has not seen an effective self-regulatory system emerge. The vast majority of online businesses have yet to adopt even the most fundamental fair information practices,” the report states. “Moreover, the trade association guidelines submitted to the Commission do not reflect industry acceptance of the basic fair information practice principles nor do they contain enforcement mechanisms needed for a self-regulatory regime.”

In response, however, the DMA says that a lot has changed since the FTC audit, which took place during a two-week period from March 9-20. In May, the DMA conducted its own survey of the Kids Hot 100, Biz Hot 100 and the Shopping Hot 100 Websites published by Web 21 magazine. That study (see chart) showed that the posting of privacy statements had increased dramatically since January. According to that survey, 70% of Kids Hot 100, 64% of Biz Hot 100 Websites and 51% of Shopping Hot 100 sites posted privacy statements vs. 38%, 47% and 36%, respectively, in January. “We urge policymakers to look at where the industry is today, not where it was three months ago,” says Robert Wientzen, DMA president and CEO.

The details of the FTC audit The FTC’s surfers researched each Website to determine whether it collected personal information from consumers, what information was collected, and whether the firm disclosed its information practices. The survey consisted of six samples-the comprehensive sample included 674 Websites, such as book and clothing retailers, and computer and software developers; 212 children’s sites; 137 health-related sites; 142 retail sites, including jewelry, and computer products; 125 financial services sites; and 111 “most popular Websites,” such as consumer goods retailers and Internet-related service firms.

While nearly 97% of Websites surveyed collected at least one type of personal information such as name, snail mail and e-mail addresses, credit card, social security and phone numbers, only 15% of the sites in the comprehensive and retail samples posted an information practice disclosure; and only 2% of the sites that collected personal information in each sample had a privacy policy notice.

Roughly one-third of the sites posted a privacy policy that allowed consumers a choice on how information will be used; 17% of the retail sites offered consumers access to that information; and 15% in the comprehensive sample provided information security.

The good news is that the FTC found that 71% of the sites in the 111 “most popular” sample had some type of information practice disclosure and 73% of the sites that collected personal information had such a policy. Of those, 44% had a privacy policy notice and 61% had at least one information practice statement.>CNUpdate>TIImproved ink-jetting>BYShannon Oberndorf>TXFor years, catalogers have talked about “personalizing” their books to achieve a one-to-one relationship with customers. Historically, many mailers have first turned to ink-jetting technology, adding tailored messages to customers. But up to now, ink-jetting has had limited applications: Messages have been restricted in terms of space and positioning; there have been only a few ink-jet type fonts; and smudging has often been a problem.

Spring Hill Nurseries, a plants, trees and shrubs catalog from Foster & Gallagher, is trying to change all that. In April, it used two printing techniques to test ink-jetting personalization on the cover, the inside spread, and the back cover. “We’re combining commercial printing with the personalization capability found in the business forms industry,” says Ann McIntyre, Spring Hill’s director of advertising corporate services.

The book’s outer eight pages, including the covers, were produced at one printer specializing in business forms, and then shipped to the cataloger’s commercial printer to be bound with the rest of the book. (Usually messages are ink-jetted when catalogs are on the bindery line, but as pages move along the bindery belt, the ink can smudge.)

To further improve the appearance of the ink-jetting, personalized pages are printed on 60-lb. #3 enameled freesheet; the rest of the catalog is on uncoated 50-lb. white offset grade. By using Scitex commercial printing technology, Spring Hill can also choose from a wide range of type fonts, sizes and colors, with better dots-per-inch resolution. And the ability to break up messages and place them throughout the first and last four pages of the catalog lets the mailers increase the number of personalized messages.

For the test, Spring Hill’s front cover features the name of the recipient in the title-for instance, “The Smith Gardening Book”-while a tagline at the bottom reads “presented by Spring Hill.” On the inside spread personalized peel-off stickers allow customers to tag pages. Spring Hill’s president’s letter is personalized, and the back cover carries a “Special Gardening Idea for the Smith’s” message.

“We want to catch our customers’ attention, talk to them the way they want to be talked to, and establish a long-term relationship,” says Bill Perrizo, senior vice president of marketing at Spring Hill.

Although response to the test was not available at press time, Perrizo says that personalizing the cover and inside pages can result in response rates of 10% compared to the typical 1% response lift from traditional ink-jetting techniques. If Spring Hill’s test proves successful, Foster & Gallagher will personalize its Breck’s book without testing.