FTC Asks Congress for Stronger Privacy Legislation

BOSTON (05/26/2000) - U.S. Federal Trade Commissioner Sheila Anthony has discovered plenty of evidence that she says challenges the idea that industry self-regulation alone can protect consumer privacy on company Web sites.

An FTC survey released last week found that many online privacy policy statements ranged from three to 12 pages, were "confusing, contradictory and ambiguous" and often provided no real privacy protection, said Anthony.

The FTC survey also found that 42% of the 91 most popular Web sites, and only 20% of 335 Web sites in its random sample, offer consumers the four types of privacy protection the agency deems essential: a notice defining privacy policies, a choice as to how data collected by the site is used, access to that data and assurances that the data is secure.

The FTC is now asking for privacy regulations, and many in Congress agree that something has to be done.

"We've toyed with the problem long enough; it worsens every day," said Sen.

Fritz Hollings (Democrat-South Carolina) last week at a U.S. Senate Commerce Committee hearing on privacy.

However, industry advocates are urging Congress to hold back and give businesses more time to develop good privacy practices.

"You may find that there are gaps in industry enforcement where government must step in to ensure compliance," said Jill Lesser, a vice president at America Online Inc. in Dulles, Virginia. "Nevertheless, it is clear that companies are responding to the increasing marketplace demand for online privacy," she said at the commerce committee hearing.

The FTC's vote to seek regulations was 3-2. One opponent, FTC Commissioner Orson Swindle, called the recommendation an "unwarranted reversal" from the commission's prior support of self-regulation.

"The majority has abandoned a self-regulatory approach in favor of an excessive government regulation despite continued progress in self-regulation," said Swindle.

Privacy is a high-stakes issue for many online companies that collect and sell personal information. If Congress mandates explicit consumer consent in order to share data with third parties, many business models could be hurt. Companies also worry that a requirement for "access" could increase information technology expenses and other expenses to make the data available to all comers.

But Jason Catlett, president of Junkbusters Corp., a privacy watchdog group based in Green Brook, New Jersey, said the FTC's conclusions about the state of privacy "were really extremely reasonable and unassailable."

The FTC applied "very easy grades" to the Web sites it investigated, he said.

For instance, if a Web site offered any type of access, such as allowing consumers to update their e-mail addresses, the survey scored the Web site as having access.

"And the majority of them still flunked," Catlett said.

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