Question

In: Economics

What are some of the conflicts between companies’ desire to collect and use their customers’ data...

What are some of the conflicts between companies’ desire to collect and use their customers’ data and the privacy rights of those customers

Solutions

Expert Solution

In today’s digital economy generating consumer information is inevitable. Though some companies use the personal information they obtain to improve and provide more services to consumers, many companies use the information in an irresponsible manner.

In countries that do provide legal protection for consumer privacy, it is never protected as an absolute right. Consumer privacy is not considered an absolute right for three reasons:

  1. What constitutes consumer privacy is culturally, contextually, individually defined
  2. Consumer privacy often conflicts with other market rights
  3. The ownership of a consumer's private information is debated — as consumer's believe they own the information and businesses believe they own the information.

Though privacy has been defined by many as the "right to be let alone", its application in today’s modern world is not that straightforward. We live in a world where our purchasing behavior, both online and offline, is shared and used invisibly. For instance, if an individual uses a social networking site, it is possible for a third party application to access personal information that is shared. Similarly, if an individual uses a warranty card or loyalty card during a purchase, it is possible for third parties, like data brokers, to collect and use the individuals' personal information.

nternet users often fear the loss of personal privacy, because of the ability businesses and their websites have to collect, store, and process personal data. For example, sites extract information from consumers through a form, and then record data about their user’s browsing habit. After collecting user information, the sites match the data with their personal and demographic information to create a profile of the user’s preferences, which is then used to promote targeted advertisements or provide customized services. The sites might also engage in web lining through which they price a consumer according to their profiles.

Online there are two main ways in which sites collect user information:

  1. Sites collect information directly through a server software. Sites often use automatic software logs to do this.
  2. A third party extracts information from the site without the consumer’s knowledge. Sites often place cookies on websites to extract user information.

Automatic software logs and third party cookie placement are two overlooked aspect of information collection. Cookies work by collecting personal information while a user surfs the net, and then feeds the information back to a Web server. Cookies are either used to remember the user, or are used by network advertising agencies to target product advertisements based on long term profiles of user’s buying and surfing habits. An example of a website that uses cookies is 'double click'. Web bugs are used by advertising networks to add information to the personal profiles stored in cookies. Web bugs are also used in junk email campaigns to see how many visits the site gets. Cookies and web bugs are just two out of hundreds of technologies used to collect personal information


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