FTC Finds E-Commerce Sites Fail to Guard Consumer Privacy

The Federal Trade Commission, Washington, yesterday said its survey of hundreds of major e-commerce sites found that only about 20 percent met FTC standards for protecting consumer privacy, according to reports.

Based on its findings, the FTC's staff is recommending the commission ask Congress for authority to issue rules regulating Internet privacy. The FTC until now has supported an industry self-regulation approach.

However, FTC officials are emphasizing that no decision has been made yet and that a final one should be prepared by the end of the month.

Howard Shapiro, an FTC spokesperson, said, “This is just a preliminary staff recommendation. There is no formal recommendation until the commission takes up the issue and votes on it, and we hope that it will be by the end of the month.”

FTC regularly launches Web site examinations, known as “surf days,” in which it checks random Web sites to make sure they are in compliance with privacy standards. The FTC's last surf day, which began in March 1998, looked at 1,400 Web sites and found 86 percent failed to make a passable attempt at publishing their information collection and use practices online. This year, the FTC did not reveal when it began its random search.

Typically, the surf days begin with the FTC's identifying a prominent Internet practice that it thinks is deceptive. It recruits surfers, which may include federal, state and international law-enforcement agencies and public-interest groups. A date and time is set for the surfers to search the Internet for sites that promote the targeted claims.

Sites that match the profile for possible law violations are identified and sent to the FTC for review. At that point, the FTC may send the site's operators an e-mail message or a warning letter advising of potential problems. The investigators usually make follow-up visits to confirm that questionable claims have been eliminated or revised. In some cases, it may initiate formal enforcement proceedings against the operator without first sending a warning letter.

According to reports, most sites this time failed to give consumers access to information that is collected about them.

The other factors on which sites were graded were the posting of privacy policies, the freedom of consumers to limit use of their personal data and the secure handling of such information. In addition, the survey judged sites on “qualitative” factors, such as the ease with which a consumer can locate a privacy policy.

The FTC did find significant improvements in performance on some indicators, including a nearly 90 percent compliance rate by Internet companies for posting their privacy policies.

The survey is eagerly awaited on Capitol Hill.

Rep. Billy Tauzin, R-LA, chairman of the House Subcommittee on Telecommunications and Consumer Protection is currently seeking a briefing on the results prior to a meeting of House Republicans on the issue.

Direct and Internet marketing groups are taking a wait-and-see stance before making any judgements about the findings.

Stephen Altobelli a spokesperson for the Direct Marketing Industry, New York, said that he could not comment because “we have not seen the report, and we don’t know what its content is going to be.”

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