FTC recommends congressional action on online concerns

ITworld.com |  Business

The Federal Trade Commission has come out in favor of legislation to ensure consumer
privacy on the World Wide Web. The call went forth Monday as the FTC reported to
Congress on the present status of industry compliance with privacy standards.

At the time of the report's release, dissent was heard from at least one
commissioner, who held that self-regulation, and not legislation, was still the answer
to a privacy question that is gaining increasing attention from IT shops and the
general public.

FTC commissioners concluded that, while self-regulatory efforts have achieved some
progress, the lack of broad-based consumer protections online requires legislative
action. The FTC found that Websites that had published privacy statements did not
consistently enforce them.

This is a move that many e-commerce companies hoped would not happen, said Jay
Stanley, analyst at Forrester Research, in Cambridge, Mass. "This has been a long time
coming," he said.

"Privacy advocates have worked hard for this," said Stanley, whose research focuses
on the Internet and public policy. "This is a pretty big deal."

Stanley recently drafted "The Internet's Privacy Migraine," a report that suggests
that Internet privacy legislation is almost inevitable in the short term.

As the report was released, FTC Chairman Robert Pitofsky said, "The number of
Websites meeting basic standards of privacy protection is far too low, endangering
consumer confidence in this marketplace."

The FTC report recommends that Congress enact legislation to ensure a minimum level
of privacy protection for online consumers, establishing "basic standards of practice
for the collection of information online." Commercial Websites that collect personal
identifying information would be required to comply with four fair information
practices: "notice, choice, access and security."

At the same time that it released its report, the FTC noted the findings of a recent
survey of the busiest sites on the Internet. The results showed that only 20 percent of
randomly sampled sites were found to have implemented all four fair information
practices.

The commission's vote to release this report was not without dissent. Commissioner
Orson Swindle called the majority's recommendation "an unwarranted reversal of 'the
FCC's'earlier acceptance of a self-regulatory approach" -- a reversal that took place
despite what he described as "continued, significant progress" in self-regulation. The
report is extremely flawed in its presentation of fact, Swindle asserted.

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