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msnbc.com
FTC to propose online privacy rules
Trade panel reverses support for self-regulation
By John Schwartz
The Washington Post
WASHINGTON, May 20 ? The Federal Trade Commission is poised to recommend new regulations to protect the privacy of consumers online, reversing a long-standing position favoring industry self-regulation, sources familiar with the new initiative said.
In June 1998, the FTC released a report on online privacy that concluded that online marketers were not taking sufficient care to safeguard the privacy of children.
THE RECOMMENDATIONS, which are scheduled to be officially released on Tuesday in a report to Congress, will reportedly include a request that lawmakers pass legislation that will strengthen the FTC's hand in regulating the companies that make up the "new economy."
Sources familiar with the FTC's decision-making process said that part of the justification for the new recommendations came from the latest version of regular online surveys conducted by the commission, which found that although many more Web sites post privacy policies than ever before, those policies do not adequately protect privacy.
VOLUNTARY RULES MADE MANDATORY
The legislation would allow the FTC to implement and enforce "fair information principles" that it had originally developed as guidelines for industry self-regulation that parallel the rules of fair-credit reporting. Those principles include providing notice to consumers about the kinds of privacy policies followed by each Web site, the ability of consumers to have a degree of access to the information that companies keep about them, and a measure of access to that information in order to be able to make changes when necessary.
The FTC would also like to be able to regulate the ways information is passed to third parties, sources familiar with the decision said.
Weak link in online privacy: kids
FTC sources said the latest version of the Web survey showed that there were still significant problems among Web sites both large and small, and staffers had decided that they could no longer wait for companies to regulate themselves.
For the most part, the FTC has followed the general principle that the industry is best left to regulate itself.
"The commission's online privacy efforts have been directed in large measure toward engaging the private sector in addressing these concerns, to ensure the continued growth of the online marketplace," Jodie Bernstein, director of the commission's Bureau of Consumer Protection, explained in congressional testimony on Thursday.
But the commission has already recognized areas where self-regulation has come up short. In June 1998, the FTC released a report on online privacy that concluded that online marketers were not taking sufficient care to safeguard the privacy of children. The commission recommended that Congress adopt legislation governing the collection of information from children, and just four months later lawmakers passed the Children's Online Privacy Protection Act of 1998.
The FTC has also put pressure on Doubleclick Inc., an Internet advertising giant that had planned to merge its vast database of the online wanderings of consumers with the catalogue shopping habits of 80 million consumers in the data holdings of a company it acquired last year, Abacus Direct. The company has announced it will postpone carrying out those plans.
The White House also has stepped up its scrutiny of privacy issues in recent weeks as President Clinton has called for closer scrutiny of online practices.
Congress continues to grapple with the issue. FTC officials will deliver congressional testimony next week about the recommendations. House Republican leaders went off on a weekend retreat at Landsdowne resort in Leesburg. The balancing acts Congress faces are extremely tough, said Rep. Billy Tauzin (R-La.), one of the organizers of the weekend retreat. While no lawmaker wants to appear to be anti-privacy, he said, the risk of poorly-thought-out legislation could mean that, "Instead of protecting people's rights, we might end up making it difficult for them to protect their rights."
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