U.S. House of Representatives: Committee on Energy and Commerce, RepublicansPrepared Witness Testimony: Taylor, Humphrey

Harris Interactive has conducted more than 30 surveys over the last 23 years on privacy issues. However, today I speak only for myself. In my brief time today, I will try to give you the big picture of what we found in our research about privacy on the Internet. Three words of caution are necessary: Public opinion is not at all homogeneous. Public opinion is not stable. Privacy is a multi-faceted issue. Privacy is a "landmine issue" which can very quickly become a major issue based either on bad personal experience or on negative media coverage of offensive violations of privacy.

Very large majorities of online users think it is "absolutely essential" or "very important" that sites:

While concerns about privacy are only a modest barrier to the use of the Internet and the Web, they do inhibit it. Having, and displaying, strong privacy policies is good marketing and good business. Many people who are initially reluctant to provide personal information are willing to do so when this is seen to be of some benefit to them. Familiarity with the Internet generally breeds comfort and trust, not contempt.

Substantial majorities of the public believe government regulation to protect consumer privacy on the Internet is necessary, presumably because they do not believe that self-regulation will be successful.

Harris Interactive, formerly Louis Harris & Associates (and often known as The Harris Poll) has conducted more than 30 surveys over the last 23 years on privacy issues for clients such as IBM, Equifax, The Privacy Leadership Initiative, The Wall Street Journal, Business Week, and the National Consumers League. Many of these surveys were done with the invaluable advice of my privacy mentor, Dr. Alan Westin. I should note that Harris Interactive conducts many research projects using the Internet, that we have strong privacy protection for our respondents, and that we are member of the Privacy Leadership Initiative (PLI). However, today I speak only for myself. My opinions are not necessarily those of anyone else.

Much of this research, relating to issues such as direct mail, consumer databases and marketing generally, in relation to credit, insurance, medical records, employment, telecommunications, law enforcement and the Census for example, had nothing to do directly with the Internet. In my brief time today, I will try to give you the big picture of what we found in our research about privacy on the Internet, and not mention the many other privacy issues we have addressed in our research.

1. Public opinion - as I hope Alan Westin will tell you - is not at all homogeneous.

3. Privacy is a multi-faceted issue involving everything from identity fraud and discrimination or embarrassment to minor annoyances.

I have often described privacy as a "landmine issue." It is only rarely mentioned spontaneously by the public as a "top of mind" issue but, when asked about privacy, large majorities of the public say it is an important issue, that they do not believe their privacy is adequately protected and they are very concerned about it. We use the word "landmine" because we believe privacy can very quickly become a major issue based either on bad personal experience or on negative media coverage of offensive violations of privacy. (This is what happened with credit ratings.)

When this happens public outrage can grow rapidly and support strong, even punitive, government regulations of industries most of whose members are blameless.

· Websites will provide personal information about them to other organizations without their knowledge	64%
· Websites will collect information about them without their knowledge	59%
· Websites will merge their shopping and browsing habits to develop profiles of their behavior and tastes	53%
· Their financial, or other sensitive information, will be stolen	53%

The Public Differentiates between Different Companies and Different Industries

Several surveys have shown that the public is much more trusting of some industries and of some companies, than of others. This trust must be earned - and can easily be lost. Having, and displaying, strong privacy protection policies is one factor consumers use to differentiate between them.

Very large majorities of online users think it is "absolutely essential" or "very important" that sites:

· Ask consumers permission before using their personal information for any other purpose than it was originally given for	94%
· Explain to consumers what personal information is collected about them and how it is used	87%
· Allow consumers to see the information the company has stored about them	82%
· Tell consumers exactly how their sensitive information is secured in transmission and storage	82%

While concerns about privacy are only a modest barrier to the use of the Internet and the Web, they do inhibit it. This is particularly true of the public's reluctance to purchase goods or services online and to use credit cards to do so.

Many of those who are unwilling, or reluctant, to use the Internet and in particular to purchase products and services online, say they would be much more likely to do so if companies had strong privacy protection policies and displayed them prominently. This willingness to do business with such companies increases even more when respondents believe that such policies are observed and enforced.

Having, and displaying, strong privacy policies is good marketing and good business, whether or not people actually read them (only a modest minority of Internet users do so regularly).

Many people do not seem to have much understanding of how companies who are selling financial services or other goods or services use information about consumers to target their sales efforts to those who are most likely to buy them. As a result, they do not see why they should provide the information.

However, when the use of the information, and benefits to consumers, are explained to them they become much more willing to provide it.

In other words, many people who are initially reluctant to provide personal information are willing to do so when this is seen to be of some benefit to them.

Familiarity with the Internet generally breeds comfort and trust, not contempt. The more people use the Internet without suffering adverse effects, the less they are concerned that their privacy might be violated. This is true of online purchasing and credit card use.

On balance, the public trusts the government rather less than it trusts business to protect its privacy. Ideally people would prefer that industries adopt sound privacy protection policies to having government regulation. However, substantial majorities of the public believe government regulation to protect consumer privacy on the Internet is necessary, presumably because they do not believe that self-regulation will be successful. Absent adequate legal protection, people seem to believe that consumer protection will be abused.