January 10, 2001, 9:16 AM — A MASSIVE EFFORT by dozens of e-commerce companies to share dossiers containing consumer buying habits and other personal information came under fire Wednesday when an Alabama senator raised privacy concerns about the effort in a letter to the Federal Trade Commission.
In his letter to FTC Chairman Robert Pitofsky, Republican Sen. Richard C. Shelby criticized the lack of clear-cut privacy protections being put in place to govern the use of personal consumer data once software developers and companies begin to implement the information-sharing standard developed by the Customer Profile Exchange Network.
Known more informally as CPexchange, the group of 70-plus companies -- including IBM; MicroStrategy, in Vienna, Va.; and First Union, in Charlotte, N.C. -- is trying to create a standard method to pool data on potentially millions of consumers. The CPexchange initiative was announced last fall, and an initial version of its standard became available in October.
"While this effort is intended to enhance commercial activity, I am troubled that insufficient attention has been given to the negative ramifications that the use of this exchange will have on the privacy of American consumers," Shelby wrote. In a statement on the letter, Shelby said, "I am greatly concerned with escalating efforts to exploit personal information in pursuit of a dollar."
A spokesman for the FTC said it is withholding comment on Shelby's request until it can be reviewed in detail. The spokesman gave no timeline for when or if action might be taken.
Officials at IBM and First Union could not be reached for comment Thursday. A MicroStrategy spokesman declined to comment on the detailed privacy issues surrounding the CPexchange standard because he said the vendor of data analysis software is not playing an active role in its development. But he added that privacy and trust is "of the utmost importance" to MicroStrategy.
The vast majority of companies currently rely on automated information systems to keep track of their customers' buying patterns in an effort to better understand and anticipate consumer likes and dislikes. These systems also include tools for analyzing and storing data on where customers live; their age, gender, marital status; and when they are most likely to be home to receive telemarketing calls.