Can You Trust Them?
Just because a site's privacy policy gives you a warm, comfortable feeling, it does not mean it will always be that way. Even if a Web site claims that the personal data you register with it will be used exclusively by the site and never disclosed to third parties, don't be so sure. In the era of failing dot.com companies, this promise is in jeopardy.
In May 2000, Toysmart, an online toy store with a TRUSTe (www.truste.com) seal of approval, filed for bankruptcy protection. With approval to display TRUSTe's seal, an online company such as Toysmart says it will abide by standards that include the following:
Disclosure— The Web sites will post clear notices of what personal information is collected and who else might share it.
Choice— Users can choose to opt in or opt out whether to allow other access to their personal information.
Access— Users should be able to get to the information they provide to correct and update it.
In the course of the bankruptcy procedure, the business was forced to sell off its assets. One of its most valuable assets was the customer databases, which included names, addresses, shopping preferences, and credit card numbers. TRUSTe worked hard to keep Toysmart from selling its customer database because the TRUSTe seal would inevitably lose credibility and value if companies like Toysmart could break their TRUSTe contracts during bankruptcy. In a Massachusetts bankruptcy court, the FTC argued that Toysmart.com would be breaking its promise “to never release the data to third parties by selling its customer lists and databases.” Toysmart would have sold its database if it could have, but continued resistance from the FTC made it hard. In the end, the FTC ruled that Toysmart would be violating consumer protection laws and privacy rights through deceptive practices in commerce.
The FTC's rulings were considered a good step forward for consumer privacy protection by many, but others saw the FTC rulings as weak because they dideventually mean that Toysmart would be paid by a third-party company to “delete” the information. TRUSTe does take steps to ensure that the privacy seals it certifies Web sites with are kept respectable and credible.