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NEWS ANALYSIS SANTA CLARA, Calif., Sept. 28 (LocalBusiness.com) -- High-tech companies are taking out some privacy-protection insurance by creating a new executive position, that of CPO, or chief privacy officer.
The new job requires a commitment to the issue, the ability to interact well with advocacy groups, and the skills to represent that constituency's viewpoint in corporate product development, according to one Bay Area firm. Santa Clara, Calif.-based Mailshell.com Inc. recently hired Karen Yu to take on the task of "Privacy Czar," according to Eyton Urbas, vice president of marketing. Mailshell.com was founded in January 1999 to create privacy-shielded marketing programs, Urbas said. "It's a free service that stops junk e-mail," he said. "We create a shell for the user, so that you can see whatever you want on the Internet, but no information is gathered about you," Urbas said. "It is an invisible proxy e-mail address." The free service generates revenue by allowing users to opt to receive marketing information from Mailshell.com's clients, and by licensing the service to other Internet companies. "At Mailshell.com, Karen's job is to be the advocate for the user, an ombudsman for privacy, and to reach out to privacy watchdog groups," Urbas said. The position was created when she was hired earlier this summer. Previously, she had been a compliance officer for an industry group. In New York, 24/7 Media on Monday became the latest in a series of companies to announce the appointment of a CPO. More such jobs will be created, predicts Chris Kelly, vice president of Booz, Allen & Hamilton Inc.'s privacy and security consultancy group. "If there isn't a corporate position already, the job has been handled by the general counsel. However, the passage of new digital signature laws and the federal initiatives will drive more firms to take it seriously," Kelly said. Size doesn't matter Size doesn't seem to be the criterion. On one end, there's industry giant IBM Corp., while Internet start-ups are also jumping in. "Generally, the CPO will become as integral as the CFO to online organizations," said Stephen Keating, executive director of Privacy Foundation, a University of Denver-affiliated group that does research on online privacy issues. Consumers are driving the creation of this position. "Concern is off the charts," Keating said. "Everyone says they're concerned about online privacy. Politically, there will be some concern." The Internet industry faces the possibility of government mandates to protect sensitive user information and industry representatives have attempted to self-regulate. Appointments are a way of not only dealing with consumer concern, but also of keeping the Federal Trade Commission and Congress from taking on the privacy-policing job. The position of chief privacy officer went mainstream about six months ago, said Sydney Rubin, a spokesman for the Online Privacy Alliance, an industry privacy group. A global concern The United States is seen as too laissez-faire for the privacy preferences of consumers in many countries. With the Internet making good on the promise of a globalized economy, what bothers a consumer in the Netherlands may affect what a company in the United States must do. So-called "safe harbor" regulations are being created to deal with the legal differences in the global marketing of consumer data. The road is rocky. In Europe, privacy is a legal right. One group, called the Transatlantic Consumer Dialogue (TACD) has pushed hard to make U.S. companies operating in Europe abide by European legal restrictions. That puts a substantial burden on companies to acquire active consent. Many Europeans are very sensitive to the abuses of governments both during World War II and the Cold War, when information on citizens was routinely collected and misused. In the Netherlands, census data was used by the Nazis to round up Jews and other political opponents. In the former East Germany, the data collected by the notorious secret police, the Stazi, is still a political hot potato. That legacy of abuse has left a variety of deep scars. Multinational companies may have dozens of divisions, operating independently, and each collecting different data. A consumer request to have a piece of information removed or corrected "might seem straightforward," Rubin said, but it is anything but. It is the chief privacy officer's job to sort it all out, oversee corporate policies on the collection and use of consumers' information, and make sure each department's practices conform to those policies. The front lines In this battle for consumers' trust, Rubin said, "Privacy officers are on the front lines for their companies." Many of those companies, in the new economy and the old, hope their chief privacy officers will do the job well enough to forestall legislation that would mandate practices to protect privacy. Kathleen Spring in New York also contributed to this story.
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