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Roundup of Privacy Initiatives, Effect on Ecommerce Merchants

Summary

There was much action from the privacy space in the past couple of months, including changes that could impact how consumers shop and how retailers collaborate with their business partners. In this guide, I will present an overview and analysis. […]

There was much action from the privacy space in the past couple of months, including changes that could impact how consumers shop and how retailers collaborate with their business partners. In this guide, I will present an overview and analysis.

1. New Privacy Law in California

On September 27, 2013 California approved a new law, AB370, that requires retailers to include two new privacy policy disclosures for managing personally identifiable information, as follows.

  • Disclose if the merchant honors the”don’t monitor” setting from internet browsers.
  • Clearly identify the practice of allowing third parties to collect personally identifiable information from the site.

The legislation also suggests that websites include a hyperlink inside their privacy policies that contributes to a description of any program or protocol which allows users a”don’t monitor” option. This means that retailers need to review all third party relationships and evaluate whether there’s a need to capture customer information and disclose that in the privacy policy. Furthermore, if there are reasons for your website in order to ignore the”don’t monitor” setting, it has to be clearly described in the privacy policy. Despite the fact that this is a California law, it applies to all websites that are seen by California residents and hence will need every website’s privacy policy to be upgraded. View the complete bill here.

2. Digital Advertising Alliance Opt-out Cookie

Digital Advertising Alliance (DAA) has launched an initiative to permit customers to opt-out of online behavioral advertisements from participating companies by keeping an opt-out cookie with the customer’s browser. This cookie can be set by choosing the option from the Advertisement Choices icon displayed on the upper right corner of an advertisement, as seen in the picture below.

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“Advertisement Choices” example.

This has little effect on retailers except for permitting consumers to make a decision to stop customized advertisements for all companies which are part of DAA. Consequently, if an internet merchant is part of DAA, then it is going to need to honor the opt-out cookie and prevent all behavioral advertisements to that customer. The list of companies and advertising networks which are participating in this initiative are recorded here. This online privacy initiative requires consumers to maintain the setting”on” for accepting third-party cookies in their browsers.

3. W3C’Don’t Track’

“Don’t Track” is a brand new browser setting that’s been proposed by World Wide Web Consortium –“W3C,” the principal standards organization for the net — which will be handled by consumers to turn off and on monitoring by sites. This is extremely similar to the DAA Opt-out cookie except for the following difference: Don’t Track is a browser setting that, once turned off or on, applies to all third party websites, not just the websites and companies that are a part of DAA. Online retailers will need to honor this setting and will eliminate the ability to provide personalized promotions and advertisements to customers if a customer has turned on this setting. This could decrease earnings for retailers that rely on third-party or advertising content to create earnings, as advertisers will be not able to customize the content to the visitor if this setting is turned on.

The Tracking Protection Working Group within W3C is leading this initiative and more details are here.

4. Stanford’s Cookie Clearinghouse

Cookie Clearinghouse (CCH) is an initiative by Stanford University which offers information”for users to make decisions about privacy.” CCH is growing block-lists and allow-lists to ascertain whether a browser must take a cookie from a website. CCH’s approach is based on the following four presumptions for the performance of a web browser if a Website is not listed in the block-list or allow-list:

  • When a user visits a site, place the cookies from this site;
  • When a user doesn’t visit a web site, don’t place the cookies from this site;
  • When a website is attempting to store a DAA opt out cookie, place the opt out cookie with that website;
  • When a user consents to placing a cookie, set the cookie.
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These presumptions imply that just first-party cookies will be set when an individual visits a website versus third-party cookies. This rule may be overridden if the user decides to take a cookie. This is the way the Safari browser works and Firefox’s new Aurora variant has implemented the exact same functionality.

Very similar to W3C’s Don’t Track setting, this initiative could impact online retailers which generate some of their revenue from advertising or third party content suppliers. The first release of CCH will be launched around end of 2013 and then will we understand the real effect of the new privacy feature.

Cookie Clearinghouse will allow internet users to better control cookies.

5. Mozilla’s Plan to Block Third-party Cookies

Mozilla’s Firefox browser is likely to block third party biscuits by default. This would indicate that third-party and advertisers content providers would be unable to produce a cookie unless the user directly visits their sites, permitting them to decide on a first-party cookie. This will have an impact on advertisers using third-party cookies to track consumer activity across different websites. Disabling third party cookies by default will affect the merchants in precisely the identical manner as W3C’s Don’t Track and Stanford’s CCH, as retailers will shed revenue generated by advertisers and third party content suppliers.

Adding to the confusion about which cookies are bad or good, Google has just announced it will stop using cookies and, instead, use a fresh ID called”AdId.” We’ll presumably find out more from Google about AdId shortly.

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