EBay Asks Congress for Federal Net Regulation

WASHINGTON (05/21/2000) - A lawyer for eBay Inc. is calling on Congress to pass online privacy legislation that preempts individual states' own efforts to legislate Internet privacy protections. Tod Cohen, eBay's director of governmental affairs, told the Congressional Privacy Caucus Thursday that heading off online privacy laws percolating in state legislatures was one of the "minimum legislative requirements" of any federal bill they might consider.

"One of the things we're most concerned about is the 50 states having 50 different standards," Cohen told the panel. After the briefing, Cohen drew a distinction between statutory and enforcement preemption, saying that he wasn't opposed to the state attorneys general moving to police online privacy - as long as they did it under one set of national rules.

The subject of Internet privacy is heating up along with the outdoor temperature in Washington as federal lawmakers increasingly pay attention to the issue. While some in the industry have long been opposed to any legislation, others have begun to worry in recent months about the flurry of legislative and law enforcement activity in the states. For them, the prospect of trying to comply with 50 different and possibly unenforceable privacy standards is daunting.

For their part, the states seem uninterested in deferring to Congress on privacy. In January, New York State Attorney General Eliot Spitzer proposed a ban on the sale of Web surfers' personal information, with new penalties for "identity theft." Maryland Gov. Parris Glendening wants a ban on spam and protections for public information stored in state databases. Christine Gregoire, attorney general for the state of Washington, has proposed giving consumers access and control over their data - and the right to sue for damages for the misuse of it.

The Privacy Caucus, a bipartisan, bicameral group of 23 federal lawmakers that formed earlier this year, held today's informal briefing with Cohen and other industry representatives to gauge the situation. Also appearing were an Internet security expert, and a law professor who argued for preservation of personal anonymity. One industry representative darkly warned lawmakers that attempts to legislate online privacy could have a chilling effect on Internet freedom.

"I can go to most Web sites and enjoy content free of charge," said Josh Isay, director of public policy for DoubleClick.com. "Why? Because of Internet advertising." Isay said DoubleClick doesn't use personal information in order to target marketing at Web users. DoubleClick came under fire earlier this year for an abortive plan to use online information with offline data such as names and addresses culled from the files of Abacus Direct, a marketing firm that DoubleClick bought last year.

DoubleClick dropped the plan under a firestorm of criticism but didn't avoid being targeted for investigation by the FTC. Richard Smith, an Internet security consultant, demonstrated to the caucus today that many Internet sites use "Web bugs," practically invisible bits of code embedded in Web pages that silently track users' online movements. "This is not discussed in any privacy policy as you go around the Web," Smith told caucus members.

Today's briefing comes one week before a full Senate Commerce, Science and Transportation Committee hearing on privacy that will feature testimony from the five members of the Federal Trade Commission. Also next week, the commissioners will unveil what has become an annual report on Internet privacy.

That report is expected to signal a shift in the FTC's own stance from one that encourages pure industry self-regulation to one that calls on Congress to pass some form of broad Internet privacy legislation.

The report is based in part on a March survey of Web sites' privacy practices and the recommendations of a special advisory committee that studied online access and security questions for the FTC. The commission's staff, which hasn't been shy about launching investigations this year into Internet sites from Amazon to Yahoo, is said to recommend that the commissioners ask Congress for new legislation. Also scheduled to appear at the May 25 Senate hearing are representatives from America Online and the industry group Online Privacy Alliance, as well as two online privacy advocates. Meanwhile, a raft of privacy legislation continues to float through both houses of Congress. But it remains unclear whether, or how, lawmakers will act on the issue this summer.

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