DoubleClick settles customer privacy investigation, but Gartner urges caution

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DoubleClick has warded off an investigation into its privacy practices by agreeing to adhere to strict restrictions and pay up a $450,000 settlement.

A 30-month investigation, by attorneys general from 10 states, investigated DoubleClick's practices of gathering Web users' personal information and surfing habits.

Under the settlement, DoubleClick will adopt privacy-related restrictions that include giving consumers access to their online profiles, verifying its compliance with the agreement and paying $450,000 for states' investigative costs and consumer education.

The investigation stemmed from DoubleClick's announcement in early 2000 that it would use personal profiles to bolster the appeal of online banner ads. DoubleClick soon scrapped the plan.

Now, Web sites that allow DoubleClick to profile its visitors must disclose DoubleClick's activities in the site's privacy policy, and that the ad provider will not share user data collected on behalf of one of its clients without that client's permission, the agreement states.

But analyst firm Gartner isn’t convinced that this is the whole answer. “Legal practices aren't necessarily good business ideas,” said analyst Kimberly Collins. “Enterprises cannot abdicate responsibility if they enlist DoubleClick or any other firm to collect data and market to their customers and prospects. They are also accountable for how the data is used and how offers are delivered to customers.

“For financial service providers (FSPs) in particular — for which customer trust is paramount — such practices can do more harm than good if they cause users to question the FSP's respect for their privacy.”

Gartner recommends that FSPs model their business plans on the impact of consumer demands for online privacy and regulations such as the European Union Data Protection Directive. “As more people shop for their primary FSP online, establishing a trusting relationship is paramount. FSPs must ensure the customer's first impression is a good one,” she concludes.

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