Privacy for Trust

One great shock in last year’s Internet retreat was how entire niches were devastated.

In clothing, those left standing were mainly old-line catalog merchants, who simply placed web front ends on existing systems.

In pet supplies, those left standing were existing store retailers, who added web fulfillment to some of their warehouses.

The biggest surprise, however, came in financial services. The online delivery of insurance policies and big loans seemed certain to bring big web profits a year ago. Now those areas look like cornfields after the harvest.

In most niches the causes of failure are easy to spot. In retrospect, it was stupid to scale fulfillment at $1 billion for a $100 million market or to pour marketing dollars into niches that didn’t exist yet. “If you build it, they will come” only works in the movies.

But everyone buys financial services. Most of us hate the hassles involved in buying an insurance policy or getting a home loan. Putting the process online can produce a huge savings that customers share in.

Yet sites like Mortgage.com have fared no better than Pets.com did. Why was that?

Some say it was simply a matter of trust. Never mind that most mortgages turn over in a few years. We want to make that agreement with a bank that will be around 30 years from now, even if we’re not.

And if we’re not going to be around, trust counts even more. Why don’t more people buy life insurance policies online, even from companies that have agents, big headquarters, and all the other paraphernalia that tells you the name means something?

It turns out trust is a personal thing. The State Farm and Allstate agencies aren’t closing, and they’re not all rushing to set up web stores, either.

Well, there’s a start-up that claims it has a solution to the online trust question. Backed in part by Equifax, the credit report outfit, Privista isn’t selling anything — yet. Instead, it’s offering a simple, free service.

When you register with Privista and prove your identity (giving answers only you would be expected to know about your financial situation), it promises to tell you if anyone tries to get a loan in your name. If you’re the one getting the loan, the notice is simple reassurance. If you’re not getting a loan, the notice shows someone may be trying to steal your identity.

Identity theft has quickly become one of the 21st century’s great fears. Once someone gets your Social Security number and driver’s license number, it’s fairly easy for him or her to start getting credit cards and other loans in your name. Your Social Security number and driver’s license number are the keys to unlocking your identity in the market.

So having someone you can trust to protect you from identity theft, free, would seem to be a great way to build trust. When Privista comes at you with its own financial products, or those of companies it trusts, will you listen? This web start-up is betting you will.