Simplification of Privacy Disclosures: An Experimental Test

Privacy and Security

Article Snapshot

Author(s)

Omri Ben-Shahar and Adam S. Chilton

Source

Journal of Legal Studies, Vol. 45, pp. S41-S67 (June 2016)

Summary

Increasingly, policymakers require firms to simplify legal disclosures. In the area of data privacy, advocates hope that following “best practices” such as using warning boxes to alert consumers will prevent unwise behavior. However, the evidence shows that simplified notices and warning boxes have little effect on consumer behavior.

Policy Relevance

Focusing regulatory efforts on simplifying disclosures is unlikely to be effective.

Main Points

  • Privacy regulation has focused on requiring firms to disclose how they use data, in the hope that consumers will be more careful about sharing data when they learn how it is used.
     
  • Firms post privacy notices with considerable details, but consumers remain unaware of these details and continue to divulge considerable amounts of personal information.
     
  • Advocates propose requiring firms to provide short, simple disclosures instead of long, complicated disclosures.
     
    • Some recommend “best practices” such as avoiding collecting information unnecessarily, and to present information clearly.
       
    • Some propose trimming the privacy policy to a few essential facts (including information that consumers least expect) and presenting them in a warning label, similar to the labels used on food.
       
  • A marketing research firm was asked to conduct an experiment to explore whether simplified notices would change consumer behavior.
     
    • Respondents answered survey questions about risky sexual behavior.
       
    • Before they were given the survey, they were shown different types of privacy notice—some simplified, some more complex.
       
    • The privacy practices were designed to be disturbing.
       
  • The respondents who were shown simplified privacy notices did not alter their behavior compared to those who were shown complex notices.
     
    • Respondents spent no additional time reviewing the simple notices.
       
    • Respondents’ understanding of the privacy practices did not improve.
       
    • Respondents’ expectations as to their legal rights did not change.
       
  • Respondents who were shown a simple warning label highlighting the worst privacy practices spent more time looking at the label, but only a few respondents changed their behavior by withdrawing from the survey.
     

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