FTC Recommends Privacy Legislation

Internet industry groups have long been pushing for self-regulation of Web
commerce and privacy, but the Federal Trade
Commission, after determining that self-regulation has been inadequate,
has recommended that Congress pass
legislation to protect consumer privacy.

The Commission based its recommendations on a survey of the most-visited
sites on the Internet, which found that only 20 percent have implemented
all of the privacy practices that the commission feels are necessary.

“While the Commission applauds the efforts by the private sector to address
the issue of online privacy, the survey results show that such efforts have
not been enough,” said Robert Pitofsky, chairman of the FTC.

“As this year’s survey makes clear, the number of Web sites meeting basic
standards of privacy protection is far too low, endangering consumer
confidence in this fast-growing, pro-consumer marketplace.”

Internet industry groups and Internet marketers, though, are highlighting
the positive points in the FTC’s survey of Internet privacy practices, and
saying that legislation is unwarranted.

The battle is largely one in which the libertarian views of the industry,
which hold that regulation stifles growth and innovation, confront the
consumer protection stance of the FTC and privacy advocates.

“Every week some company announces a new technology that improves our
ability to protect privacy online,” said Wally Snyder, president and chief
executive officer of the American Advertising
Federation.

“Why would anyone want to stifle that process through legislation that
knocks the air out of the marketplace?”

The Direct Marketing Association also
chimed in with its objections to new legislation, saying Congress is
already working to protect children, financial information, and medical data.

“Any attempt to measure all Web sites by one uniform yardstick illustrates
an inability to gauge a dynamic marketplace,” said Jerry Cerasale, senior
vice president of government affairs for the DMA.

“All information is not the same and can not be measured equally. In our
society where freedom of information is cherished, we should rightly look
to where data collection and usage benefits consumers, and where data usage
harms consumers. The focus of government must be on preventing real harm,
and letting the marketplace extend benefits to consumers unimpeded.”

Privacy groups praised the FTC recommendation, saying it was time for
government to step in.

“The Federal government has finally started to abandon the unsupportable
fiction that companies will voluntarily protect consumer privacy to the
level consumers want,” said Jason Catlett, president of Junkbusters.

“The next step is for Congress to guarantee people the rights they need to
protect their privacy.”

The FTC recommendation asked Congress to pass legislation guaranteeing that
consumer-oriented commercial Web sites abide by standards of practice for
information collection online. The commission said that these sites must
give consumers notice about the information collection, give them a choice,
give them access to their information, and keep that data secure.

There was dissent, even among those in the panel that came up with the
recommendation. Two of five commissioners disagreed with at least part of
the report.

“Legislation should be reserved for problems that the market cannot fix on
its own and should not be adopted without consideration of the problems
legislation may create by, for example, imposing costs or other unintended
consequences that could severely stifle the thriving New Economy,” said
commissioner Orson Swindle.