Congress Eyes Online-Profiling Privacy Issues

SAN MATEO (06/13/2000) - This time honing in on online advertisers' consumer-profiling habits, a U.S. Senate committee on Tuesday took up the kinds of privacy issues that in the past have dogged companies such as DoubleClick Inc.

Online advertising agencies use profiling methods to target banner ads and other advertising to those consumers most likely to respond to those ads. But privacy advocates and consumer groups worry that these online advertising giants -- called network advertisers -- collect too much data and give consumers very little control over how that information is shared and used.

The U.S. Federal Trade Commission -- which is in the middle of crafting a plan for network advertisers to self-regulate their profiling methods -- on Tuesday issued a report detailing some of the privacy concerns surrounding online profiling. That report was the centerpiece of Tuesday's Senate Commerce Committee hearing headed up by Sen. John McCain, a Republican from Arizona.

"There are real challenges to creating an effective self-regulatory regime for this complex and dynamic industry, and this process is not yet complete," said Jodie Bernstein, director of the FTC's bureau of consumer protection, in addressing the congressional panel Tuesday.

Lawmakers weighed in on Internet profiling and privacy concerns. For instance, Sen. John Kerry, a Democrat from Massachusetts, cautioned that the FTC was getting close to regulating online privacy but not the offline profiling that goes on in grocery stores and other places.

"Why focus on one marketplace and not others?" Kerry asked.

Meanwhile, McCain pushed for evidence that the FTC and network advertisers would be able to reach agreement in their negotiations and eliminate the need for immediate legislation that would regulate profiling practices.

DoubleClick Chief Privacy Officer Jules Polonetsky told the congressional panel he is "optimistic" that the agency and industry can come up with a plan for self-regulation. He argued that the Internet Economy would not thrive without the use of targeted advertising made possible by profiling techniques.

"Advertising is most effective for consumers and the companies running the ads when those ads reach the consumer at the right time and when companies use information to reach out to consumers with information they are likely to click on," Polonetsky said.

DoubleClick came under scrutiny from the FTC in February, when privacy groups claimed the company unlawfully tracked the online activities of Internet users and combined Web surfing records with detailed personal profiles contained in national marketing databases.

FTC's Bernstein said the FTC was still reviewing the advertising industry's proposals on self-regulation and had not yet decided whether agreement would be reached.

Privacy advocates, however, claim self-regulation is not enough.

"We have followed the work of Truste and BBBOnline other self-regulation efforts and we have concluded that they are not providing adequate protection in the online world," said Marc Rotenberg, president of the Electronic Privacy Information Center.

Jennifer Jones is an InfoWorld senior editor.

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