According to a recent report published by the Pew Internet and American Life Project (www.pewinternet.org), of the 76% of Internet users who did not make a purchase during the latest holiday season, 79% of them cited concerns of giving up credit card information over the web as a reason!

Never mind that I can think of many people who have had their credit cards stolen from their wallets and not a single person who has ever had credit card information stolen online.

Never mind that your grocery store collects and sells detailed information about your buying habits in return for the privilege of using a discount card in their store.

Never mind that the waiter who takes my credit card and disappears out of site with my signature would have a much easier time stealing my identity than would some online hacker.

Never mind the facts, never mind reality. What matters is perception, and right or wrong, the common perception among Internet users is that there are heightened privacy and security risks online. As someone doing business electronically therefore, you need to take special care to reassure your customers that when they come to your site or communicate via email, they are safe.

Here’s an example of a missed opportunity. . .

There’s a bagel store near my office called “Finagle A Bagel” (www.FinagleABagel.com). Good food, nice atmosphere, free newspapers, etc. They have a “Frequent Finaglers” club where you receive free food as you rack up purchase dollars. Great idea for promoting loyalty, rewarding purchases and making me feel, “like I belong.”

But here’s the problem: To sign up for the program on their web site, I am asked for a bunch of personal information, including my home and business addresses, my birthday, and the names and birthdays of my family members!! That’s a lot to ask of someone with whom you don’t necessarily have an established relationship.

In addition, although I see the “Frequent Finagler Rules” posted prominently (13 to be exact, thank you FABagel legal department), I can’t find a word of explanation regarding my privacy or what they intend to do with my personal information. My decision: No thanks.

Now I don’t really think that the FABagel folks are going to do anything bad with my information. But that’s not the point. In the face of uncertainty, on a low value offer, many people will simply choose to pass rather than run the risk. The FAB people don’t realize that if they want the opportunity to use the Internet to do one of the things it does best — enable frequent, personal, cheap communication between companies and their existing customers — as the Pew study above demonstrates, they need to provide some reassurances.

Bottom Line: I frankly don’t know why the average user is so obsessed with privacy online and so unconcerned with privacy in the physical world, and yet study after study bears this out. This means that if you want people to play along, you need to go out of your way to help them feel safe. Make sure that every time you request information, you explain exactly what you intend to do with it. You don’t have to be fancy, just clear (click here to see an example).

Do this right and your customers will thank you with their enthusiastic participation. Do this wrong and you may end up with a lot of leftover bagels!