Privacy Protection in Electronic Commerce – a Theoretical Framework

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Privacy Protection in Electronic Commerce – A Theoretical Framework Milena Head and Yufei Yuan
Michael G. DeGroote School of Business
McMaster University
Hamilton, Ontario, Canada
headm@mcmaster.ca; yuanyuf@mcmaster.ca
Head, M., Yuan, Y. (2001). “Privacy Protection in Electronic Commerce: A Theoretical Framework”, Human Systems Management, 20, pp.149-160.

Abstract
In this paper, a theoretical framework for privacy protection in electronic commerce is provided. This framework allows us to identify the key players and their interactions in the context of privacy violation and protection. It also helps to discover the responsibilities of the key players and areas for further research.

Keywords: Electronic commerce, Privacy protection, Privacy policy, Privacy Violation, Self-regulation, Anonymity
Milena M. Head is an assistant professor of management science and information systems in the Michael G. DeGroote School of Business at McMaster University. Her research interests are in topics that relate to electronic commerce and human-computer interaction, including World Wide Web navigation, Web-based agents, electronic commerce intermediaries, online privacy, information retrieval and interface design. She holds a Ph.D. (1998) and a Master of Business Administration (1993) from McMaster University and a BMath (1991) from the University of Waterloo. She has published in International Journal of Human-Computer Studies, Interacting with Computers, and has presented articles at several conferences.

Yufei Yuan is a professor of information systems in the Michael G. DeGroote School of Business at McMaster University. He received his Ph.D. in Computer Information Systems from the University of Michigan in 1985. His research interests are in the area of matching problems, approximate reasoning with fuzzy logic, decision support in health care, Web-based negotiation support system, electronic commerce and privacy. He has published more than 30 papers in professional journals such as Management Science, Fuzzy Sets and Systems, European Journal of Operational Research, Academic Medicine, Medical Decision Making, International Journal of Human-Computer Systems, and others.

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1. Introduction
The potential of electronic commerce has attracted the attention of many business and consumers. However, online shopping has not been adopted as quickly as expected. Internet users are concerned about the privacy of information they supply to Web sites [26], and this is one factor that has been holding them back from open acceptance of the electronic marketplace. Many people believe privacy protection in the United States is inadequate. A recent Harris Poll shows that 84% of Americans are concerned about threats to personal privacy, and 78% believe consumers have lost control over how their personal information is used [27]. Researchers at the Wharton School of Business claim that privacy and security concerns are actually driving people away from the Internet [18]. The cost of privacy violation to potential economic growth is rising in America. What was once seen as a threat to civil society is now a clear and present danger to the economic health of the country. Unless privacy is adequately protected, the revolutionary potential of the Internet may not be realized [10].

Information privacy is the “claim of individuals, groups, or institutions to determine for themselves when, and to what extent, information about them is communicated to others” [1]. Privacy protection should prevent non-permitted, illegal, and/or unethical use of private information. It is important to note that the right of privacy is not absolute. Privacy must be balanced against the needs of society. Criminals may use privacy protection to cover their crimes. The public’s right to know surmounts the individual’s right of privacy.

Security and privacy are often related to each other but they are not the same. In the computer security community there is still...
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