An Empirical Study of Consumer Perceptions and Comprehension of Web Site Privacy Policies

The U.S. legislation at both the federal and state levels mandates certain organizations to inform customers about information uses and disclosures. Such disclosures are typically accomplished through privacy policies, both online and offline. Unfortunately, the policies are not easy to comprehend, and, as a result, online consumers frequently do not read the policies provided at healthcare Web sites. Because these policies are often required by law, they should be clear so that consumers are likely to read them and to ensure that consumers can comprehend these policies. This, in turn, may increase consumer trust and encourage consumers to feel more comfortable when interacting with online organizations. In this paper, we present results of an empirical study, involving 993 Internet users, which compared various ways to present privacy policy information to online consumers. Our findings suggest that users perceive typical, paragraph-form policies to be more secure than other forms of policy representation, yet user comprehension of such paragraph-form policies is poor as compared to other policy representations. The results of this study can help managers create more trustworthy policies, aid compliance officers in detecting deceptive organizations, and serve legislative bodies by providing tangible evidence as to the ineffectiveness of current privacy policies.