May 25, 2000 - Alarmed that companies aren't protecting personal information collected on their Web sites, The Federal Trade Commission has recommended that new guidelines are needed to guarantee basic consumer privacy protection.
In a report to Congress, the FTC urged legislation be passed that would require commercial Internet sites to implement four basic privacy standards:
- Consumer notification of what (and how) information is collected and to what extent it will be used;
- Option to choose whether information can be shared with third parties;
- Access to review any collected data;
- Security of the information.
The commission says that while self-regulatory efforts by Internet companies have made progress, the lack of a broad-based industry implementation has fallen far short of the protection needed by consumers, leaving them exposed at a critical time in the development of the online marketplace.
The Senate Commerce Committee has scheduled hearings on the report Thursday, but it is unclear whether Congress is serious about passing Internet rules.
The recommendations to Congress are supported by the findings of the FTC's survey of the Internet's most visited sites. Only 20 percent of randomly sampled sites with more than 39,000 monthly visitors had implemented the four basic privacy guidelines. Of the 100 most popular sites, 42 percent had guidelines in place.
The report concludes that the industry's limited success in implementing fair information practices online, as well as continuing consumer concerns about Internet privacy, make this the appropriate time for legislative action. The commission approved the report by a split vote of 3-2.
Junkbusters' President Jason Catlett hailed the action. "The Federal government has finally started to abandon the supportable fiction that companies will voluntarily protect consumer privacy to the level consumers want. The next step is for Congress to guarantee people the rights they need to protect their privacy."
However other industry groups disagreed. "This is a first step down the slippery slope of government regulation of the Internet," said Harris Miller, President of the Information Technology Association of America.
Adds Christine Varney, an advisor to the Online Privacy Alliance and former FTC Commissioner, "Online businesses know that protecting consumer privacy is good business and the business of privacy is booming. Privacy policies are now ubiquitous online, and these policies empower consumers to make informed choices about what personal information to share."
Dissenting commission member Orson Swindle worried about stifling business. "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 ew Economy," he said.
Sen. Robert Torricelli, D-NJ, who earlier this year introduced legislation concerning Internet privacy, observed, "If consumers do not believe their interests are protected regarding safeguarding their most vital personal information, the Internet will never reach its true economic potential.
It's unclear what prospects such legislation would have for passage during an election year, and some lawmakers already have questioned whether the industry really needs regulation.
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