Show of Good Faith It's more important than ever to show customers you'll keep their information private.

It's getting hard for consumers to hide, as"spyware" programs invade personal computers and largeretailers such as Wal-Mart move toward Radio FrequencyIdentification (RFID) technology, a wireless "bar code"that lets retailers track inventory even after it's left thestore. Even paying in cash may not guarantee customers anonymitymuch longer: The European Union is adding RFID to the Euro. Ifsuccessful, RFID could be added to U.S. currency within a fewyears, making it possible to track money from the ATM to the cashregister.

Not surprisingly, consumers are wary. In a February 2003 HarrisInteractive survey of 1,010 adults, 54 percent felt that mostbusinesses don't handle customer information "in a properand confidential way," and some 53 percent said that existinglaws and business practices don't provide enough privacyprotection.

Laws are strict concerning the privacy of consumers' medicaland financial information, but other-wise, the rules are blurry."The legal pro-tections provided to consumers are still fairlythin," says Chris-topher Wolf, a partner in the Washington,DC, office of Proskauer Rose LLP and chair of the law firm'sprivacy group. "Unless a company chooses to provideprotections, there's no legal requirement that there beprotection."

Companies can re- write privacy policies on the down-low, andconsumers won't know unless they read the fine print. Thenthere are the semantics of the privacy game: A company may promisenever to sell consumer information, but may rent it to thirdparties. Even worse, it takes a law degree to understand manyprivacy policies. "There are some pretty stealthy policies outthere," says Deborah Pierce, executive director of PrivacyActivism, a nonprofit group in San Francisco and Seattle thatadvocates for consumer privacy.

At press time, there were at least 50 privacy bills navigatingCongress, but technology moves faster than the law. To stay oncustomers' good sides, follow the FTC's fair informationguidelines. This means making your privacy policy easy to read,telling customers what information you're collecting and whatyou're doing with it, offering access to this information attheir request, letting customers "opt out" of datagathering, and taking security measures to protect customerinformation.

Small companies have a chance to distinguish themselves byincorporating privacy into their value proposition instead ofviewing it as a necessary evil, says Mozelle W. Thompson, acommissioner with the FTC in Washington, DC, which has gone aftercompanies including Microsoft and Guess? Inc. for their privacypractices. A 2002 survey from The Progress & Freedom Foundationfound that 93 percent of popular Web sites were letting customerschoose whether their personal information is shared. Does this meanthat more companies are heeding the concern over privacy?"Yes," says Thompson. "But they're by no meansperfect, or we would not still be bringing cases."