Take consumer privacy seriously, urge e-comm CEOs

The CEOs at Amazon.com, eBay, America Online and Lycos sent out a letter to more than 400 of their colleagues earlier this week, urging e-commerce companies to take the need to protect consumer privacy more seriously.

Sent out under the umbrella of the NetCoalition, a Washington-based advocacy group formed by 10 Internet companies, the letter put out a call for online businesses to regulate themselves.

"We believe that a key aspect of consumer confidence on the Internet is making sure consumers understand when and how their personal information is being used as they engage in e-commerce and other online activities," said the letter, which was dated May 8 and posted today on the NetCoalition Web site.

"In this vein, we must - as industry leaders - take the initiative in ensuring that Internet companies establish and promote the adoption implementation of rigorous voluntary privacy practices," the letter continued.

News of the NetCoalition group's letter comes as the Federal Trade Commission (FTC) is preparing a report to Congress concerning consumer privacy practices on the Internet.

The Wall Street Journal yesterday wrote that the report will show that only 20% of the hundreds of companies surveyed by the FTC posted a privacy policy on their sites. The newspaper also reported that the FTC will recommend Congress issues rules to regulate such policies - a break from the commission's previous stance of allowing the industry to regulate itself.

FTC spokesman Eric London wouldn't comment on the matter, other than to say that the full report and any recommendations from the FTC will be released later this month. He added that a similar FTC report in 1998 found that only 14% of companies disclosed anything about their online privacy practices.

Tim Neilander, an associate in the technology and intellectual property practice of Seattle-based law firm Preston, Gates, Ellis LLP, said he sees the NetCoalition letter as an attempt to head off federal action.

"The reason the industry stands up and writes the letters, I believe, is because the industry is trying to police itself rather than have the feds do it," Neilander said. The problem facing e-commerce companies is that many Web sites "aren't being direct about what their practices are, and what they're doing with the information" consumers provide, he added.

The NetCoalition letter asked companies to take action in the following ways:

- Give notice about practices regarding the collection and use of personally identifiable information.

- Provide consumers with the choice of controlling such collection and use.

- Supply contact information for consumers with questions about privacy.

- Allow access to ensure the accuracy of information provided.

- Maintain the proper security to protect the integrity of that information.

Last year, Jupiter Communications in New York released a report predicting an $18 billion drop in potential e-commerce revenues and a $2.7 billion lag in potential online advertising revenues as a direct result of consumers fearing their privacy won't be honored online.

Listed as the top two concerns of online shoppers were doubts about credit-card information security and fears that personal information will be sold to third parties. Jupiter tabbed a privacy policy linked to a home page and a guarantee that personal information won't be misused as the top two methods of instilling customer confidence.

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