Would Social Network Users Be Better Protected by a Privacy 'Nutrition Label’?

If the privacy policy of your favorite social network was laid out like the fat grams, calories and protein on the back of your favorite packaged food, would you actually read it? Would it make you think twice about what you consume online?

If the privacy policy of your favorite social network was laid out like the fat grams, calories and protein on the back of your favorite packaged food, would you actually read it? Would it make you think twice about what you consume online?

Researchers at Carnegie Mellon University first proposed replacing the fine print, legalese privacy policies used by websites and social networks with a standardized, easy-to-read label in a paper published in 2010.

Now that the glare of legislators, consumers and even the advertising industry is fully fixed on online privacy, the idea of a “nutrition facts”-style label for Web privacy policies is getting a second look.

The Carnegie Mellon proposal took the standard nutrition label familiar to all consumers – fat, calories, carbs etc listed clearly on the back of all food packages – and applied it to the privacy policies that are required on every website and social network, but that no one ever reads.

Take a look at the standardized privacy label the team created for the website of the fictional “Acme Corporation.”

In making their claim for the need for a standard label, the Carnegie Mellon team cited research that it would cost 365 billion dollars per year in lost productivity if consumers actually read the policies of all the companies they interact with.

“In short, today’s online privacy policies are failing consumers because finding information in them is difficult, consumers do not understand that there are differences between privacy policies, and policies take too long to read,” the researchers said in 2010.

Fast forward to 2011, and not much has changed.

A week ago, the Senate Committee for Commerce, Science and Transportation held a hearing on online privacy where the discussion focused on the problem of: privacy policies that largely go unread.

The Obama adminstration’s point person on communication policy, Assistant Commerce Secretary Lawrence Stricking, testified: “These lengthy, dense, and legalistic documents do not appear to be effective in informing consumers of their online privacy choices. Surveys show that most Americans incorrectly believe that a website that has an online privacy policy is prohibited from selling personal information it collects from customers.”

The question now becomes whether that focus on the issue from legislators and beyond could be the game changer to mean a real change in what shows up when you click “Privacy Policy” on the Web.

The Federal Trade Commission (FTC) footnoted the Carnegie Mellon-type label approach to privacy policies in its 122-page online privacy report released last December.

The White House also created a subcommittee last fall to focus solely on online privacy, while all reports indicate Senators John Kerry (D-Mass) and John McCain (R-Ariz) are close to introducing legislation that would create the nation’s first “online privacy bill of rights.”

Of course, the issue of privacy and protecting their own rights would still fall to consumers, even with an easy-to-read privacy label standard. Seeing the fat grams in cake or the sugar level in a jar of frosting doesn’t stop someone from enjoying them both.

But, the Carnegie team has their own research to support their argument that a nutrition-style label would at least help.

In a study of 700 participants, the researchers found that consumers answered a greater number of questions correctly after reviewing privacy policies in different formats. More specifically, consumers demonstrated a better grasp of a company’s data collection practices based on a “privacy label” than a text version of a privacy policy.

Tell us what you think. Would you stop and read a company’s privacy policy if it was in a label format? Would it change the way you operate in social networks and on the Web?