Cui bono?: Exploring Consumers’ Responses towards Privacy Notices

Abstract

Consumers receive numerous privacy notices every day; however, whether and why privacy notices influence consumers’ decisions have remained relatively unexplored. This research aims to provide insights into the consequences of the mandatory use of privacy notices. Across two field studies, three surveys one of which was conducted with executives, and three experiments, this paper shows that consumers react negatively towards privacy notices; their intention to use an application and a browser or to purchase a product decreases. The reason behind this effect is that privacy notices make it salient to the consumers that they are being observed by companies. This, in turn, makes them calculate the benefits and costs each party receives. This calculus results in the belief that companies benefit from tracking practices more than consumers. The disproportion of benefits in favor of companies decreases the perceived customer-centricity of a company, which reduces usage intentions. As the perceived profitability of a company increases, consumers consider them to be engaging in tracking more. Furthermore, non-profit companies are perceived as more profit oriented and less customer centric when they send privacy notices. The effect is mitigated when companies provide an option to decline the privacy notice.