Online Social Networks and E-Commerce - MIT Computer Science ...

Clarence Lee and Shirley Fung
behind the curtains. There are currently no policies in the United States that protect the misuse of data
being passed on to third parties.
On the other hand, the European Union actually has a directive (95/46/EC) that protects private
information by ensuring that a proper procedure has been taken during the action of passing data onto
another party. As of now, there is no such standard to protect consumer privacy in the United States.
Many transnational companies have adopted the policy to ensure that they meet the guidelines in the
European Union, but it is unclear whether domestic U.S. companies will follow suit.
Non-profit organizations, such as TRUSTe, have begun to allow online businesses to be certified as a
TRUSTe member. TRUSTe gives out different seals for businesses for different kinds of standards. One of
them is the Web privacy standard. To obtain the seal for Web privacy, businesses are required to have an
approved privacy notice, disclosure of practices, and provide mechanisms for choice and consent.
Without enough pressure from the public, online businesses will not have an incentive to meet these
guidelines. Moreover, this action is completely voluntary, and has no infrastructure for accountability
when something does go wrong. Without accountability and legal binding, this system will not adequately
protect consumer privacy. For instance, even though TRUSTe requires disclosure of how sensitive data is
used, it does not guarantee that misuse of customer’s sensitive data would have any adverse consequences
on the businesses.
Scenario 2: Insurance Raising Your Premiums Because of Your Lifestyle
You have browsed and searched for books on skydiving, and have posted on your public Facebook
profile that you enjoy extreme sports. For the purposes of better marketing, Amazon and Facebook as
used this data to label you as the “extreme adventurist,” so that they can send you regular email
newsletters about mountain climbing, white water rafting, etc. Your health insurance company
purchases this information from Amazon and Facebook, and has decided to raise your health insurance
premiums this year.
As browsing history and purchase history become more and more informative, companies can deduce all
kinds of characteristics about consumer behavior. While companies can use the information to better
promote products that suits your needs, there are times where this information can be held against you, as
illustrated in scenario 2. For instance, if you have posted pictures on Facebook of your sports car, and
joined a forum for underground street racing enthusiasts, car insurance can raise your premiums.
Likewise, your browsing and search history of WebMD.com may help health and life insurance companies
to determine what your health risks might be.
Most often, consumers would use a Web site and never think that this information can be held against
them in another context. While companies may disclose this information to another party, consumers
rarely know what exactly had been disclosed, and how the information was used. In addition, when harm
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