After a long period of enjoying the benefits of having their personal financial information easily transmitted and stored by sellers of goods and services, consumers are now being confronted by significant new threats to their financial privacy. How – and how well – consumers are coping in this environment of fear and insecurity is examined in this AARP Public Policy Institute Issue Paper.
Results from three empirical studies – including a national survey of consumers' online and offline behaviors for protecting their financial privacy – are utilized in this report which finds that:
- There is no shortage of advice for consumers on actions they can be taking to protect their financial privacy.
- While the time, money, and mental costs of following any single piece of advice can be minimal, the cumulative costs of privacy self-protection can be substantial.
- People vary in their desire for financial privacy, but large percentages of consumers have adopted new behaviors to guard their financial privacy.
- Most people perceive that they are currently working hard to protect their financial privacy.
- Most have chosen to take new sensible precautions rather than give up transacting with firms offline and online, but a significant minority of consumers are choosing to avoid these transactions rather than expose themselves to invasions of their financial privacy.
Individuals can't do it by themselves, however, and the author concludes that businesses and government bodies need to educate the public, develop new privacy protection technologies, and offer credible, well-publicized programs that lower what it costs consumers to defend their privacy. In the absence of high benefit-low cost methods, consumers may succumb to “privacy protection fatigue” and choose instead to avoid new and potentially beneficial financial services. (54 pages)