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BizReport : Law & Regulation : April 18, 2012

EU Cookie Law deadline looms but businesses and consumers unprepared

With just weeks before the Information Commissioner's Office imposes the EU Cookie Law studies suggest that many companies don't comply and under a quarter of consumers will opt into cookies.

by Helen Leggatt

The deadline is looming but, according to a recent survey of 55 major UK-based companies by KPMG, a whopping 95% still were not compliant at the end of March. After May 26, 2012, websites that fail to comply with the new EU Cookie Law face fines of up to half a million UK Pounds ($800,000).

This Cookie Law is amended privacy legislation that requires websites to obtain informed consent from visitors before they can store or retrieve any information on a computer or any other web connected device.

"Whilst the majority of the websites we analyzed made a reference to the use of cookies under either the terms and conditions or specific privacy policies, and some also state how the cookies are being used, this is not enough to ensure compliance with the directive," said Stephen Bonner, a partner in the Information Protection and Business Resilience business team at KPMG.

"Organizations now need to focus their efforts on establishing an inventory of their websites and the cookies currently in use, before evaluating their purpose and establish a pragmatic plan to ensure compliance."

How will consumers respond to the change in law and transparency of cookie use? A new survey of 1,097 Internet users by Econsultancy found that only 23% would provide "immediate consent" and accept them. The majority (60%) would hesitate to accept them and base their decision to do so on what the cookie was used for.

Seventeen percent of respondents would flat-out not accept cookies yet, according to a new TRUSTe Privacy Index, they're likely to encounter 14 cookies per page on an average website.

Another hurdle businesses face is illustrated by a bigger Econsultancy survey of 1,593 Internet users that found nearly a third have no clue what a cookie is or what it does.

Again, this survey revealed a hesitance among Internet users to automatically accept cookies. Over a quarter (26%) would accept a cookie if it made a website easier to use, but almost the same number would 'soldier on' without them. The worrying statistic for businesses is that half would just go and find another website.

"The ECPR is a major - and somewhat unwelcome - challenge for online businesses in the UK. As the survey results show, persuading users to opt in to cookies will be very difficult," says Graham Charlton, author of The EU Cookie Law: A guide to compliance, a must-read for businesses still trying to adapt to the new law.

"E-commerce sites that rely on analytics to improve the user experience and maximize conversion rates, and publishers which rely on advertising income in order to offer free content online face a serious challenge. The law could result in a loss of data, sales and ad income for many online businesses."

Tags: consumer tracking, ePrivacy Directive, EU Cookie Law, online privacy, online regulation

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