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Is that coupon worth the risk to your personal privacy?

Panel debates location-based services on smartphones

Today is Data Privacy Day, a time to call attention to the trade-offs consumers make every day when they use technology. In particular, a program held in San Francisco Wednesday night looked at the potential risk to privacy of location-based services that are becoming popular smartphone apps. GPS on a phone can guide you to a destination in your car, offer a coupon discount to the restaurant you’re walking by or tell you that one of your BFFs is in a bar right around the corner. But who else knows that, who’s collecting this information and who might be using it for other than the stated purposes?

The chief privacy officer for Microsoft, a privacy advocate and a lawyer for the Federal Trade Commission (FTC) were among those debating the privacy versus convenience dilemma at an event held by the Churchill Club.

Lamentably, some consumers are unaware of the privacy risks and don’t necessarily care, said Owen Tripp, co-founder and chief operating officer of Reputation.com, a company whose business is giving individuals control over their online privacy and reputation.

“Privacy is the speed bump on the way to a free burger coupon,” said Tripp, who voiced concern, not just about what information about you may be exposed to others, but about what “inferences” others are making about you based on that information. You may use the GPS navigation app on a phone to get to a particular destination but can the app determine your speed based on how long the trip took you? he asked. “[Car] insurance companies would love to have that information.”

All sorts of information could be collected and used against consumers in obtaining health insurance, credit or employment, added Jim Dempsey, vice president for public policy at the Center for Democracy & Technology, an advocacy group that works with businesses to establish solid privacy policies and practices, but also lobbies government to regulate those practices.

The FTC is in the midst of drafting rules for businesses on what their privacy policies need to be. Laura Berger, the FTC attorney, said that after holding hearings around the U.S. on the proposed policy, the agency found that many consumers don’t understand what’s happening with their data, but that the proposed regulations would offer them greater transparency and control. “What privacy means is that consumers are given both the information and the tools that they need to make effective decisions about their data,” Berger said.

A global Microsoft survey released Wednesday revealed a lot about consumers’ use of location-based services (LBS) and their concern about privacy protection. It showed that 6 in 10 consumers surveyed were aware of LBS, 51 percent had used an LBS app and, of those, 94 percent found them very or somewhat valuable. However, 52 percent had strong concerns about sharing their location with others and 51 percent said the ability to control how their information is used would make them more comfortable using LBS.

Microsoft Chief Privacy Officer Brendon Lynch acknowledged that the industry as a whole puts too much of a burden on the consumer to know what their privacy rights are, but noted that Microsoft has built in privacy features into Windows Phone 7, its new operating system for smartphones. For instance, he said, the location feature is off by default and that the first time a consumer uses any pre-installed LBS apps, the privacy disclosure tells them that data will be shared by this app, “so they make an informed decision,” Lynch said.

But the FTC’s Berger said consumers mistakenly believe that if a company posts a privacy policy on its Web site that this means that the consumer's private data won’t be shared. And the moderator of the program, Melissa Parrish, a Forrester Research analyst, said a privacy policy may mean little if the company lacks “the underlying practices that match up with the policy.”

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