Original URL: http://www.theregister.co.uk/2006/02/21/protecting_consumer_privacy/

Private identities become a corporate focus

'It's going to get scarier'

By Robert Lemos

Posted in Security, 21st February 2006 11:37 GMT

During his keynote during the RSA Conference, Scott McNealy seemed almost apologetic.

The Sun Microsystems CEO, infamous for his pronouncement, "You have zero privacy anyway - Get over it," took a conciliatory tone on the stage here, allowing that privacy might be something for which consumers should fight. He warned companies that, unless they protect consumer privacy, they could lose out on significant online growth.

"It's going to get scarier if we don't come up with technology and rules to protect appropriately privacy and secure the data, and the most important asset we have is obviously the data on people - our customers and employees and partners," McNealy told attendees last week. "And if we can't protect that, people are not going to go online."

McNealy joined the heads of other technology companies at the RSA Conference who called for better protection of privacy and more specific ways of thinking about what data needs to be known to identify partners and customers. Part of McNealy's epiphany: The week before the conference he was notified by a partner company that a lost laptop had his personal information stored on the hard drive.

"I wish I could share with you the note I sent back to them," he said, adding that he now better understood the consumer point of view. "It is a personal issue. What am I supposed to do now? They sent me this note, now what do I do?"

McNealy's realisation mirrored a wider conclusion among companies that privacy can be good business. It's a hard won lesson in the industry, and one for which consumers continue to pay. In 2005, more than 52m account records were put at risk by the poor security of the companies handling data. In 2006, the problem seems hardly any better, with one newspaper company accidentally wrapping people's Sunday editions with a list of 202,000 subscribers' social security numbers and Seattle-based Providence Home Services acknowledging that backup tapes containing 365,000 patient records in the states of Washington and Oregon had been stolen from an employee's car.

Along with the realisation that many companies have not handled customer data securely, many experts are questioning the amount of identifying data that companies store. Over the last decade, while the internet has boomed and busted, online identity has remained a binary proposition to most businesses: Users either fully identify themselves to a website or hide behind an anonymous handle. Because commerce sites believe anonymity means less security, online businesses have increasingly asked customers to more fully identify themselves, a choice highlighted by many companies' difficulty in keeping the data safe.

"Often times the topic of the level of authentication to create these models (of commerce) deteriorates into a presumption that there is an extreme choice to be made between true proof of personal identity and anonymity," RSA Security CEO Art Coviello said.

Coviello argued that companies should adopt technology that allows consumers to present trusted credentials for specific attributes, such as the visitor to the website is over 18 years old. In the current online world, a person might have to enter a credit card as "proof", but in reality that would prove very little and place valuable data in the website's system. Instead, a trusted third party - such as the Department of Motor Vehicles - could issue the certificate, which could then be presented to any site that required the data.

During the keynote kicking off the conference, Microsoft chief software architect Bill Gates told attendees that the company's next operating system will support just such a system. Dubbed InfoCard, the application will be part of Internet Explorer 7 and initially act as a password vault. However, as a companies start signing agreements of trust and build federated identity systems, InfoCard could hold credentials that prove only certain attributes, Gates said.

"You don't always want to present all your information," Gates said. "You will have different cards: Cards that just give your location, cards that are more secure that give your credit card (information), cards that you would protect very carefully and you would have a PIN for every use of it where you might authorise access of your medical information."

A Microsoft spokesperson stressed that the technology supports a system of credentials, but does not require it. Companies could continue to require customers to fully identify themselves, but the idea that less can be more has taken root, Gates said.

"Thinking of those different cards really has gotten people understanding that there are different types of authentication, and even in those authentication steps some cases have a level of indirection so you can have privacy even as you are doing those authorisation steps," he said.

The idea of a system of credentials that prove only what is really necessary is not a new one. Digital cash pioneers David Chaum and Stefan Brands both researched the topic in the 1990s. Brands created much of the framework for such technologies and has patented some of the models of credentials.

Consumers benefit from such systems because they give out less information and have to worry less about their privacy. Businesses can gain by having less information stored on their servers. Moreover, putting fewer barriers in the way of the customer will mean more business, vice president of online financial giant E*TRADE Bank Rob Shenk said during a panel on consumer authentication for the financial industry.

"Putting something in place that interdicts the legitimate flow is lethal, lethal," Shenk said.

Technology companies may be pushing for a change in how websites authenticate people, but it remains to be seen whether merchants will actually willingly settle for less information about their customers.

In any event, businesses and customers need to move beyond simple passwords linked to records of personal information, Microsoft's Gates said.

"Today we're using password systems and password systems simply won't cut it," Gates said. "They are very quickly becoming the weak link."

This article originally appeared in Security Focus.

Copyright © 2006, SecurityFocus