THE AI TRUST PARADOX: PERSONALIZATION BENEFITS VS. PRIVACY CONCERNS IN BRAND RELATIONSHIPS

Abstract

Artificial Intelligence (AI) has transformed how brands interact with consumers by enabling hyperpersonalized experiences, predictive insights, and seamless engagements. However, as brands increasingly rely on personal data to optimize personalization, consumer privacy concerns have intensified. This study investigates the “AI Trust Paradox,” a phenomenon in which consumers value the convenience and relevance driven by AI-based personalization while simultaneously fearing data misuse, excessive surveillance, and loss of autonomy.The research aims to analyze how personalization benefits and privacy risks influence brand trust, customer satisfaction, and long-term loyalty. A mixed-method approach was adopted involving a survey of 200 respondents and a secondary review of global datasets and recent privacy legislation. Descriptive statistics and correlation analysis were used to interpret the relationship between personalization acceptance and trust outcomes.Findings show that personalization has a positive impact on engagement and purchase intent, but only when consumers perceive transparency, consent control, and ethical data governance. Privacy intrusiveness significantly weakens trust and increases skepticism towards AI-driven brands. The study proposes a trust-centric AI framework for marketers focused on responsible personalization, consumer agency, and regulatory compliance. The conclusions underscore the necessity for organizations to balance personalization benefits with ethical data practices to sustain brand relationships in the digital era.