The California Right to Know Act of 2013 (AB 1291) has drawn a lot of attention in recent days. Introduced back in February by State Assemblymember Bonnie Lowenthal, the Act seeks to modernize existing consumer protection law when it comes to direct marketing. Problem is, current law only really pertains to dated methods such as direct mailers and telemarketers. To put it simply, the Right to Know Act would make it so that companies like Facebook, Google, and others – their servers replete with consumer information – are also covered by those protections.
Under the Act, these companies would be required to make user information and how its been used in the preceding to customers upon request. This is done by broadening the current legal focus from direct marketing to any company that stores and maintains information on its customers. In addition to basic personal and demographic information, the bill also includes browser history, photos, user posts, and location information – information that didn’t really exist when current law was passed.
Privacy advocates like the ACLU and Electronic Frontier Foundation are predictably exuberant about the Right to Know Act. The ACLU argues that the bill will “give Californians an effective tool to monitor how personal information, including about health, finances, your location, politics, religious, sexual orientation, buying habits, and more, is being collected and disclosed in unexpected and potentially harmful ways.”
Meanwhile, companies that would be effected by the legislation have taken an oppositional stance, suggesting that it places an undue burden on businesses that are already beleaguered by our still-sputtering economy.
If It’s Free, You’re The Product
It’s a great saying, mostly because it’s true. In exchange for a free Facebook account, we agree to be bombarded with ads tailored to our personal interests, have our information used for market research and sometimes even have that information sold to third parties.
Sure, it’s part of the deal, your standard quid pro quo. But is it really that simple?
Even if we agree to license our information to a site like Facebook or Google for the aforementioned uses, does that somehow imply that the license we grant is absolute and exempt from basic public oversight? I’m not so sure. Moreover, if these sites have nothing to hide when it comes to the way they capitalize on user information, isn’t making those uses available to users just good business?
While the California Right to Know Act will certainly create an obligation of companies to their customers, it’s hard to believe that – if their information sharing practices are above reproach – the resources needed to meet such an obligation will actually have a negative affect on their bottom lines.
In fact, reputable sources suggests that it’s just the opposite.
Right To Know Is The Right Way To Go
Fellow HBR contributor Julia Kirby confirms this modern consumer sentiment. “If you’re running a business, this is what you contend with: the rampant assumption that your main goal in life is to part fools from their money.”
There is, however, a way for companies, particularly websites that are privy to such valuable personal information, to lay those concerns to rest.
“Companies are beginning to recognize that transparency is the counterweight to public skepticism,” Balter argues. In fact, such openness can have a net positive effect for companies that run themselves in an ethical, respectable manner. “[Transparency] means providing some insight into your thinking and considerations, so that those around you can feel involved and empowered.”
As most brand managers will tell you, facilitating such an empowering connection is like gold, with dividends that pay far beyond the initial investment that might be necessary to be transparent.
Olivia Khalili over at Cause Capitalism lists the following benefits that follow this “glass-walled company” philosophy:
Increased revenue. Being more transparent (a combination of truth and specificity) with your company’s actions can get you an 18% jump in revenue. Go the other direction and you can anticipate a 6% drop in revenue (EngagementDB 2009 report).
Problem solving. The point of transparency is not only to reveal problems, but to solve them. In its commitment to making only toxin-free cleaning products, Seventh Generation ran tests and worked with suppliers. Later, when a toxin was found in a product there was understandable outrage from consumers. ”We didn’t take that one essential step: to share our trials and tribulations with everyone outside the company who might have wanted to…challenge our progress,” says Jeffrey Hollender. The outcome was bad publicity and a knock to consumer trust, both of which could have been mitigated or avoided if consumers had been brought into the product evaluation process earlier.
Employee commitment & innovation. Transparency isn’t just a public-facing practice. Allowing employees to see where the business outperforms and in which areas it’s weak binds each employee more closely to the company’s strategic goals. Openness and trust (two effects of transparency) create a comfortable environment that spurs innovation and experimentation and reveals early failures or oversights. The more a company trusts me with its wins and shortcomings, the greater my personal connection to the company is and the harder I want to work as an employee (or consumer advocate).
Consumer trust. This point is almost not worth mentioning given its obviousness. Consumers trust companies and nonprofits that are open and truthful with them–just as they trust friends, romantic partners or parents who do the same.
In light of these benefits, it should give consumers pause when they hear about companies resisting this type of legislation by resorting to the feeble argument that it is simply too great an obligation to make their use of personal information available to their users upon request. To be sure, it should cause shareholders to wonder if the companies they’re investing in are more concerned about short-term success or long-term sustainability.
Never mind the implications that the defeat of this bill would have for one’s fundamental right to privacy. Such opposition to the Right to Know Act translates to a conscious refusal of long-term success, which rightly leaves us to wonder just what it is that they’re hiding.