Protecting Consumer Privacy Online

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  • 0:01 Online Privacy
  • 0:32 Government Regulation…
  • 3:22 Business Initiatives…
  • 5:28 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Every week, there is a news headline announcing a consumer data breach from a well-known organization. In this lesson, you will learn how government and business is trying to protect consumer privacy online.

Online Privacy

Imagine your excitement as you leave an electronics store with a new laptop for school. Now imagine waking up the next morning to find out due to a data breach, which is when sensitive information is viewed or stolen, your checking account was emptied. This is happening more frequently to consumers online.

In this lesson, you will learn how consumer privacy online can best be protected. Let's take a look at how government and business each handle consumer privacy.

Government Regulation of Consumer Privacy

Government is a huge participant in protecting consumer privacy online, but unfortunately, Congress has not been successful at establishing broad privacy legislation. Many smaller laws have been passed, though, to protect consumers.

The Federal Trade Commission, or FTC, is currently the federal agency that oversees the consumer protection of privacy and deceptive or unfair business practices. In 2012, the FTC published a list of best practices that companies should follow in order to protect their consumers' privacy.

The ideas are for companies to provide privacy by design through the production of products that have built-in privacy for consumers. For example, the social network Google+ was designed to give the user the ability to create multiple circles to keep information private for family and/or friends.

In addition, companies need to offer simplified choices for consumers so that they can choose if and when their information can be tracked. For instance, Microsoft offers users the ability to utilize a preference on their browser to not be tracked. Other companies, such as Twitter, are supporting the option as well.

Lastly, all companies need to offer greater transparency of their privacy policies so that consumers know how their information is being used or shared. Most major corporations are now making their customer privacy policies easily viewed and explaining exactly what is being collected and/or shared with third parties. Here is an example of Kraft's:

Aside from the FTC, there are a few other acts that were also created to protect consumers' privacy online. They are:

The Financial Services Modernization Act covers consumers' financial privacy in regards to financial loans. The act specifies exactly what private and non-private information can be shared, forces companies to inform consumers about their policies and also gives consumers the option to opt out and share no information.

The Fair Credit Reporting Act provides numerous ways for consumers to protect and check on their credit. For example, consumers are now allowed to get one free credit report from each of the three agencies per year. Consumers are also allowed to attain their credit score for a fee and challenge anything on their credit report that is incorrect.

Children's Online Privacy Protection Act, also known as COPPA, was formed to protect children's online privacy. The act establishes requirements for business websites with services targeted to children under 13 years of age.

Business Initiatives for Consumer Privacy

Businesses also have their own ideas about handling consumer privacy issues.

Ethical leadership is one way companies can instill ethical treatment of their customers and their private information. Companies that have CEOs and upper managers who act ethically and value their consumers are providing leader-of-the-pack privacy policies. Starbucks' CEO recently won an ethical leadership award based on how he ran his company, providing quality products, and showing respect for humanity.

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