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Report: Half of Net users mistrust sites

More than half of all Netizens say they don't trust a Web site even if it has posted a privacy policy--a statistic that doesn't bode well for online advertisers and sellers.

More than half of all people using the Internet say they don't trust a Web site even if it has posted a privacy policy--a statistic that doesn't bode well for online advertisers and sellers.

According to a Jupiter Communications report, about 64 percent of those surveyed mistrust online privacy policies. In light of recent privacy issues faced by America Online, United Airlines, and other online companies, the high percentage of wary users is understandable, analysts say.

But their worries can be costly. Jupiter projects that privacy issues could potentially put an $18 billion dent in the $40 billion e-commerce revenue it projects by 2002. Moreover, the study added, consumer fears are proving to be "more complex" and difficult to assuage.

"Web sites haven't really looked into why consumers are scared," Jupiter analyst Michele Slack said. "It's not just about having legislation or privacy policy postings. There is a general nervousness about giving personal and credit card information on the Net."

To start fixing the problem, he said, "sites need to actively promote their efforts among consumers to start pushing back their fears."

Privacy fears stunt e-commerce
The study states that increased attention to privacy issues that are fueled by media and government scrutiny will likely block the progress of e-commerce and online advertising.

Those surveyed who say they just browse, rather than buy online, said they are unlikely to purchase anything unless sites help them feel more secure about handing over credit card information.

"These same people will be less willing to give information about themselves until they feel they can trust the site; and without that information, the sites can't offer the targeted advertising that more and more advertisers are looking for," Slack said.

Sites that have branded themselves strongly, such as Amazon.com, and some that have roots in the brick-and-mortar world, are likely to garner a greater degree of trust--but not by much, Slack said.

United Airlines, as reported by CNET News.com, posted a privacy policy promising to protect personal information on one part of its site. Yet a separate "terms and conditions" statement on the site states that, by using the service, consumers forfeit any expectation of privacy--leaving Web surfers to wonder whether their information will be sold to marketers.

Other large corporations have been scrambling to enforce privacy standards. Disney's Buena Vista Internet Group and Infoseek in June adopted a policy that prohibits the Go Network and its member sites--which include Disney.com, ESPN.com, Family.com, and ABC.com--from accepting or buying ads from sites that fail to meet their criteria for posting clear privacy policies, the firms said.

Outside validation lacking
Jupiter reports that 70 percent of the shopping, travel, and finance sites surveyed had a privacy policy linked to their home pages. Still, the majority of the sites were using their own company policy rather than participating in a third-party program that provided some kind of seal of approval.

"One would think brand relationship or past relationship in the offline world should have a positive impact," Slack said. "But we are seeing an impact that is not so great."

He said a fundamental step toward good faith is to have a privacy policy in place with an independent organization, such as the Online Privacy Alliance or the Better Business Bureau.

"Above and beyond that, they need to actively communicate their standards to consumers," she said. "Meanwhile, consumers should have a healthy dose of fear."