While technology is providing loads of exciting ways for businesses to know more about customers and how they act, it’s important to never lose sight of how leery people are about giving up privacy. Companies need to examine all the potential pitfalls related to privacy and must be prepared to change course quickly–even if they feel customers are being irrational and overreacting.

A fascinating recent blog post by David Thompson, co-author of “Wild West 2.0: How to Protect and Restore Your Reputation on the Untamed Social Frontier,” explores how seemingly innocuous advances in technology can add up to major changes in privacy. It has always been possible to see public records about people’s property holdings, traffic violations, divorce proceedings, and so on, but it was hard enough to do so that the records might as well have been private. Now, all the records can be searched easily via the Internet and assembled. Someone could even arrange to have them all show up as the first entry when a person’s name is Googled. New technologies, such as face-recognition software, add another layer to the privacy issues. As cameras become more ubiquitous and searchable online, someone could post a camera outside, say, an abortion clinic and use face-recognition technology to match people to the photos on their Facebook pages.

The blog post is interesting not just for its informed ideas about how privacy issues will evolve but also for the speculation in the comments section about worst-case scenarios. One person imagines stalkers going to the mall, taking pictures of possible victims, identifying them via Facebook, using other sources to learn where they live and then attacking them. However implausible that scenario, people don’t always stick to the rational when it comes to privacy issues, and all it takes is one untoward incident to confirm their fears.

So, while we’re huge proponents of experimenting with technology to better understand customers and to increase communication with them, privacy is going to be a tricky, tricky issue. As companies innovate, they need to have their eyes wide open and have at least one Plan B available for when a privacy problem arises.