For example, existing federal law makes unfair and deceptive practices unlawful. Thus, if a company provides its customers with a privacy statement that does not accurately reflect its privacy practices, it can precipitate a challenge by the appropriate regulators. The primary consequence for companies that do not comply with fair information practices is the loss of the customer's trust and business, unfavorable media coverage and loss of future business opportunities. We concur with Secretary Daley's belief that business has the most vested in the success of electronic commerce, which depends on consumer confidence and trust to transact business on the Internet. Market sanctions are severe and swift for companies that fail to maintain the trust of their customers.
Public opinion is an effective privacy regulator.
Where threats to the privacy or security of consumers have been identified, the response by industry has been swift and decisive. There is evidence that consumers respond to threats to their privacy or security. For example, America Online planned to provide lists of its customers' phone numbers to telemarketers and other direct marketers. Under pressure from its subscribers, the media, politicians and privacy-rights groups, AOL canceled its plans. Another example involved Experian, Inc., one of the three largest credit reporting companies.