Privacy Becomes Huge Issue

Speaking at a recent San Fernando Valley Bar Association Forum, Roger Louis Kohn told this story: A customer shopping in the supermarket slipped and sued the grocery store, which in turn dug into its database, filled with details of shopping patterns gleaned from checkout data, and found the customer had bought alcohol in the past. Kohn, who is chair of the Southern California Privacy Rights Committee of the American Civil Liberties Union, doesn’t use a supermarket membership club card, but recently when he was making a purchase offered at discount to club members, the customer in line behind him graciously offered hers up and the cashier swiped it before he could protest. “Now I may be in trouble because she’s a drunk,” Kohn told the audience for the forum. He was only half-joking. In the digital age, whether it’s a business, a hacker or the government, someone is watching, and the right to privacy, the subject of the SFVBA forum that was co-sponsored by California State University Northridge, has become an issue of considerable weight. For those who participated in the SFVBA forum, Christopher Shortell, assistant professor of political science at CSUN and Michael Scott, an attorney and professor of law at Southwestern Law School, in addition to Kohn, the consensus is that politics in the age of terrorism and electronic marketing is slowly whittling away the individual’s right to privacy. But the issues for business are far more complex: They want to collect data about customers to bolster marketing while making sure the same data stays out of the hands of hackers and criminals. They want employees to avail themselves of e-mail and the Internet to improve productivity, but they worry that the use of these electronic tools can put them at risk for sexual harassment lawsuits and other workplace-related problems. They want to comply with government regulations but the laws are often conflicting. Many companies, worried that e-mail messages and the viewing of sexually explicit Internet sites may lead to sexual harassment lawsuits, have amended employee handbooks to say that employees have no reasonable expectation of privacy when using company equipment. Firing workers According to a study conducted by the American Management Association last year 26 percent of organizations surveyed fired workers for misusing the Internet and another 25 percent have terminated employees for e-mail related infractions. But these protections haven’t kept companies out of the fire. The Federal Trade Commission has brought at least nine cases against companies for security practices that compromised consumers’ confidential financial information. The cases often result in mandatory audits by an independent third party to be conducted every other year for 20 years. Banks, already subject to a variety of audits and regulations, have been directed to provide further protections to better authenticate online transactions by the end of the year. “We have bought more products and we are spending more money as a result of the kinds of threats the company faces in security and fraud,” said Scott Mackelprang, vice president of security and compliance for Digital Insight Corp., a Calabasas-based provider of online banking products and services for banks. “It used to be simpler in the old days. You bought firewalls and intrusion protection. I can’t quantify it but it’s greater, and it takes more attention internally for us to manage.” Chief privacy officers Companies that sell goods over the Internet have been subject to a number of laws at the federal and state levels, so much so that some very large corporations like Procter & Gamble, and AOL have appointed chief privacy officers. For most others, the task falls to the legal or financial officers. “I think people just have to keep on top of the news and see what’s going on,” said Scott of the task of keeping up with changes. “I think California feels frustrated that Washington is not doing anything in these areas, so California has taken the lead, and some of these laws are being challenged.” Government, some say, does not always have the expertise to come up with the best solutions, and some companies have begun to take a more active role in shaping legislation. “Early on we were vulnerable to whatever the government would decide,” said John Ardis, vice president at ValueClick, a Westlake Village-based Internet advertising and marketing company. “We got smarter several years ago and became proactive in monitoring legislation and actively helping to influence it. It’s not lobbying as much as it is education. What we found is lawmakers for the most part have very good intentions and want to do something good for the citizenry, but their knowledge of the Internet is extremely limited.” Most companies say that they are as interested, if not more interested than the government in protecting consumers’ privacy, if only because without these protections, consumers may stop using online services. But consumer advocates point out that the current climate, the longevity of information stored on the Internet and the expense of protecting it can be harmful even with the best intentions. “I think there’s a greater problem because there are people who are not malicious about your privacy. They are agnostic,” said Kohn. “They’re out to make money, and they’re going to do what they want.” Privacy by the Numbers Electronic Monitoring and Surveillance Survey – 76 percent of employers monitor what websites employees view. – 65 percent of companies use software to block inappropriate websites. (Half of those store and review employee computer files and 55 percent retain e-mails.) – 84 percent of companies have policies on personal e-mails – 81 percent of companies have policies on Internet use. – 32 percent of employers use some form of video surveillance. – One in five employers has had an e-mail subpoenaed by courts and regulators. Source: American Management Association and The ePolicy Institute, 2005.