February 14, 2000
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Company denies allegations that personal information captured on the Web is used improperly
By Rick Whiting
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mazon.com Inc. disclosed last week in a prospectus for a bond offering filed with the Securities and Exchange Commission that the company and its Alexa Internet software subsidiary face two privacy-invasion lawsuits and a Federal Trade Commission inquiry concerning data privacy. The revelations point to the expanding minefield companies must navigate as they seek to use customer data captured on the Web to boost sales.The FTC probe was sparked by a complaint from a Massachusetts computer consultant stating that Alexa's software improperly relays personal information such as E-mail addresses to its database-which Amazon.com can tap into because it owns Alexa. The lawsuits, seeking class-action status, charge that such actions violate the U.S. Electronic Communications Privacy Act, the U.S. Computer Fraud and Abuse Act, and the California Business and Professions Code.
In the SEC filing, Amazon.com denies the suits' allegations. And an Amazon.com spokeswoman says the suits won't alter how the company uses customer data for online marketing, adding, "The filing of the lawsuits isn't going to impact the way we go about making the customer's online experience as pleasurable as can be."
Customers can download from Alexa Web-navigation software that guides them to sites that match their online habits. The software tracks customer activity for Web-usage statistics.
An Alexa spokeswoman denies any wrongdoing. Data on consumer "usage paths" is stored without association to E-mail addresses, and Amazon doesn't have database access, she says. "We have very strict privacy policies to prevent attempts to breach consumer privacy or misuse consumer information."
Amazon.com has a data warehouse with more than 3 terabytes of data that it taps for Web-site personalization. Analysts speculate that Amazon.com may expand the use of its data or sell it to marketers. "When you're collecting that much data, there's a temptation to use it," says Chad Rider, a senior analyst with the Patricia Seybold Group. Don Peppers, a partner with Peppers and Rogers Group, says Amazon.com could consider selling summary data not traceable to individuals.
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