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Back to <-- DotComs and the Information Revolution

A Dot-Com Double-Cross Threatens Net Privacy
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Source: San Francisco Chronicle

A Dot-Com Double-Cross Threatens Net Privacy

Thursday, July 13, 2000
2000 San Francisco Chronicle

WHEN A DOT-COM crashes and burns, it's not the beige computers, office dividers or even the accounts receivable that bankruptcy bidders may want.

One valuable leftover is the data on customer buying and lifestyle habits. It's the personal information learned through e-commerce transactions and questionnaires.

Magazines, automakers and other marketers have peddled purchaser lists for years. What makes the Internet version different is the pervasive nature of the information, and in some cases, a double-cross pull on customers who were promised confidentiality. Personal privacy is lost. Also lost is confidence in e-commerce as trustworthy and reliable.

The case of the moment is which closed down in May. ``You can rest assured your information will never be shared with a third party,'' customers were told during its brief commercial life. Buying patterns, children's birthdays, street and e- mail addresses and phone numbers were collected by Toysmart computers.

After shutting down, Toysmart tried to go back on its word. Through a bankruptcy service, it sought to peddle the company's remains, including customer lists and data.

The Federal Trade Commission has filed suit to stop the sale. The Walt Disney Co., Toysmart's primary financial angel, may buy the list itself to head off legal trouble. A happy ending, in modern e-Disney style.

Privacy groups are alarmed by the experience. Especially angry is TRUSTe, a San Jose nonprofit that bestows its good-business label on business Web sites in exchange for a code of conduct. TRUSTe filed arguments supporting the federal lawsuit because Toysmart went back on its privacy pledge.

As other Internet firms fail or merge, the pressure on privacy will grow. and both sold off customer data lists after closing down.

Questions about privacy abuses should first be considered by industry self-regulation or TRUSTe's brand of policing by private agreement. The pro-business mood in Washington makes it unlikely that the rapidly-evolving Internet marketplace will be reined in.

But abuses need an answer. A good-faith agreement, such as Toysmart's promise to customers, may need enforcing by federal authorities who police the Internet marketplace. Privacy must be maintained.

2000 San Francisco Chronicle Page A22

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