FTC Seeks Approval to Regulate Internet Privacy

The staff of the Federal Trade Commission is recommending that the agency seek congressional approval to draft and issue rules on Internet privacy for commercial enterprises after this week's release of the final report of the Federal Trade Commission Advisory Committee on Online Access and Security.

The FTC also recently completed another online survey of hundreds of Web sites. The results are expected to show that 90 percent of all major e-commerce-oriented Web sites in the United States now have a posted privacy policy, but only about 20 percent are abiding by privacy standards the commission considers sufficient for consumer protection.

An FTC spokesman emphasized that the report was only a recommendation and that the commission still had to vote on the issue.

However, by issuing the recommendation, the agency appears ready to make a significant departure from the self-regulatory policy position previously espoused by commission Chairman Robert Pitofsky.

Some direct marketers, though, think self-regulation is the best policy.

Stephen Altobelli, a spokesman for the Direct Marketing Association in New York, said the DMA's interpretation of the numbers hadn't changed from last year.

“We think self-regulation is still working and that government regulation at this point is premature,” he said.

Jerry Cerasale, the DMA's senior vice president of government affairs and a member of the commission's committee on access and security, said the FTC's staff, “as opposed to FTC commissioners, appear to have a bias to regulate access” — a bias he claims consumers do not support.

At New York-based DoubleClick — an Internet advertising services network facing its own policy battles over online privacy, Josh Isay, director of public policy, said, “I am not going to speculate on what the FTC will do next, but self-regulation should be given a chance to work. I think industry is working very hard in this regard.”

Much of the online marketing industry has increased its efforts at working with government officials and consumer groups since May 1999, when a similar FTC report titled Self-Regulation and Privacy Online was presented to Congress. It acknowledged the reality of unresolved privacy issues but advised that a self-regulatory policy approach should be adopted. Nevertheless, consumer and civil liberties organizations drew different conclusions and promised that the debate would continue.

In the meantime, online privacy hearings have begun on Capitol Hill led by the Congressional Privacy Caucus, a bipartisan, bicameral group co-chaired by Sens. Richard Shelby, R-AL, and Richard Bryan, D-NV, and Reps. Joe Barton, R-TX, and Edward Markey, D-MA.

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