I recently met with Chris Babel, the CEO of TRUSTe, which certifies web sites for creating and maintaining adequate privacy policies.

It’s a tougher job than you might imagine because on today’s web there are so many ways companies can collect private data on any visitor.

TRUSTe started life as a non-profit but about ten years later it became a for-profit corporation in mid-2008 and raised a Series A round from Accel.

The company checks the privacy policies of a web site and if it passes, a graphic of a seal is placed on the home page in exchange for a yearly fee. The company monitors the privacy policies of each client and if there are any changes it re-examines for compliance.

TRUSTe also checks to see if email addresses are being sold.

Here are some notes from our conversation:

– Companies, both large and small see a significant increase in online sales simply by displaying the TRUSTCe seal on their site. A free trial is available so that companies can A/B test the seal. Companies can expect 8% to 29% increase in sales. The higher increase is for sites that aren’t well known.

– Large companies pay tens of thousands of dollars per year but small SMBs pay just $500 a year.

– The seal also helps to moderate disputes between customers and the site.

– Trying to safeguard consumer privacy is very complex because of all the advertising networks. One page can have as many as 30 different ad networks all dropping their cookies and collecting information. We have to make sure that consumers’ data is kept private with all the ad networks.

– We try not to publicize those companies that violate our privacy policies but we do drop them as a customer.

– For large companies such as Yahoo or Microsoft, we also monitor how their various business groups within the company are using customer data. If we see sharing between business groups that are not directly related we will flag it and talk to the company.

– I asked if consumers might be glad that they plugged one hole by visiting a TRUSTe certified site but the complexity of the commercial web probably means they are leaking private information from dozens of other sites they visit. Mr. Babel said that it is still important to work with sites that have good privacy policies because who we are is changing all the time, we might have an illness or have a baby, and it is important to safe guard all that data.

– The company is extending its work to checking the privacy policies of mobile apps. This is important because there is additional location data that is private.

– TRUSTe is also working with the advertising industry on best practices so that the US government doesn’t legislate new rules governing consumer privacy. There is a "no follow" campaign which could cause problems for advertisers.

– He said that consumers think that privacy policies will lessen the amount of advertising they receive but that’s not true. It just affects how well the advertising is targeted.

– TRUSTe worked closely with Facebook on its privacy policies and helped it develop an easier way for users to control their private information. It took lot of negotiating with Facebook before TRUSTe was satisfied with its privacy policies.

– Working on mobile apps can be challenging because not all mobile platforms have good privacy controls. Apple is very good but Android platforms are not as good and app developers could be collecting private information. There are lots of gray areas.

– It’s not true that younger people are more lax about their privacy. There was a KPMG study that showed that 25 year olds and under, made the most changes to their privacy settings, they were very much aware of privacy than any other group.

– Mr. Babel sees huge business opportunities, there are more than 2 million commercial web sites that could be potential customers. It currently has more than 3,000 customers. Some, such as Best Buy, show the seal on every page because it boosts their sales.

– – –

Additional info:

Clients
Participating Web Sites: 3,440
Web Privacy Seal Web sites: 2,468
Children’s Seal Web sites: 52
EU Safe Harbor Seal Web sites: 619
Email Privacy Seal Web sites: 71
International Services Web sites: 225
Fortune 500 Participants: 24