Internet Firms Act to Ease Sharing of Personal Data

Several dozen e-commerce specialists are creating a system designed to vastly improve their ability to share names, identification numbers and a wealth of behavioral data about individual consumers, a prospect that raises new questions about the security and privacy of personal information.

Several dozen e-commerce specialists are creating a system designed to vastly improve their ability to share names, identification numbers and a wealth of behavioral data about individual consumers, a prospect that raises new questions about the security and privacy of personal information.

The group, which includes International Business Machines Corp., MicroStrategy Inc. and First Union Corp., hopes its Customer Profile Exchange standard will address one of the secrets of the information age: Technology-savvy companies use so many different computer systems, they often cannot easily transmit dossiers about individuals.

This communications problem has hindered development of personalized products that many companies are betting will be enormously popular and profitable. And they say it has hurt customer service because company representatives sometimes have too little up-to-date information at their fingertips.

The problem has also protected customer privacy by making it harder for business to mine and trade complete records, specialists say.

The standard, developed in a series of meetings over the past year, would change all that if software makers begin using it soon, as the developers expect. It would enable companies to share profiles in the time it takes to press “enter” on a keyboard, using a data format known as XML.

“There is such a tremendous need there,” said Eric Schmitt, an analyst at Forrester Research. “The technology world is just crying out for a way to easily pass around information about people.”

Fast transmission would allow companies to buy demographic information more easily about customers from data merchants, or to ship out customer files to data-mining companies that specialize in profiling–the use of purchase history and personal data to anticipate what a particular customer might want to buy or do.

And that, proponents say, would ultimately allow companies to improve the delivery of everything from travel plans and custom tailored jeans to precisely arranged financial portfolios and targeted discounts on jewelry.

Boosters contend that CPExchange will bolster privacy, because it enables companies to attach to every record details about how a customer wants personal information gathered and shared.

That’s little comfort to privacy specialists, who say companies’ ability to compile records about individuals and create models of their behavior will surge far ahead of customers’ understanding or their ability to restrain it.

While praising the inclusion of a privacy mechanism, critics say relatively few federal laws or rules require companies adopting the standard to limit information sharing. Much would depend on self-regulation.

“There are no standards for what they can and cannot do,” said Lauren Gelman, director of public policy for the Electronic Frontier Foundation, a nonprofit advocacy group. “The privacy protection is not something you can build into a system designed to ease the exchange of information.”

Jason Catlett, a privacy consultant who has advised the standards group, said few individuals would have any idea how to tell companies to limit the use of their data. He said companies will only have to follow the promises they make, and those promises may do nothing to protect an individual.

“You could say they are building a machine gun with a safety catch that no one will use,” said Catlett, president of Junkbusters Corp.

Bradley Husick, one of the organizers of the profile-exchange initiative, acknowledges the group is “privacy agnostic” and cannot impose how the new standards are used. “We’re not trying to be the cops,” he said. “We’re not trying to say what’s a good privacy policy and what’s a bad one.”

But Husick, vice president of software maker Vignette Corp., said the companies involved want to offer better service, while honoring the wishes of customers. He said that companies will have to improve methods for sharing customer profiles, since that information will be essential to their business success.

“Whether we like it or not . . . data is going to move more freely over time,” he said. “As an organization, we have to create a framework. We have to look ahead.”

There’s no telling how soon or how widely the standard will be adopted. But the fact that 70 major data collectors, or online marketing specialists, struggled with the issue underscores the value they place on obtaining richer information about customers.

Acxiom Corp., for example, maintains records on about 200 million Americans, including purchase histories and the value of their homes. It combines data from different sources, flashing it to business partners over networks.

Vienna-based MicroStrategy is a data-warehousing specialist that helps companies mine mountains of customer data for insights about individuals.

Other companies help online retailers predict what individual customers likely will buy, based on data collected about their online behavior.

The 127-page document the standards group released several weeks ago will guide software makers but will not limit the information companies can include in profiles.

The specifications now include directions on how to maintain scores of potential details about individuals, including name, taxpayer identification number, national identifier, passport number and primary residence.

There is room for details about telephone numbers, addresses, e-mail, educational history, gender, marital status, birth dates, income levels, occupations, hobbies, and whether people smoke. The specifications also lay out how to document activity at sites on the World Wide Web.

Paul Conn, manager of the standards group, said the idea is to create a system that will give businesses a single, encompassing view of a customer. “It’s about making the market more efficient,” said Conn, who likened the effort to paving over what is now a rutted dirt road in cyberspace. “It’s an extremely big deal.”

Richard Smith, chief technology officer of the Privacy Foundation, concurs. But he cautions that the road businesses are creating could be filled with bumps.

“It will grease the skids and make it easier to get data out of a database and into the hands of marketers,” Smith said. “But is that necessarily a good thing for consumers? It’s not clear.”

Author: Robert O’Harrow Jr.

News Service: The Washington Post Company


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