FTC CHAIRMAN TO UNVEIL PRIVACY POSITION

Muris May Halt New Legislation

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WASHINGTON (AdAge.com) -- Federal Trade Commission Chairman Tim Muris, who up to now has held off taking a position on privacy issues, is set to unveil his stance in a speech Oct. 4, and speculation is he may pull back on the FTC's request for new privacy legislation affecting adults.

Mr. Muris' speech to a Privacy 2001 conference in Cleveland will be closely watched on several counts.

Aside from whether Republican Mr. Muris continues Democratic predecessor Robert Pitofsky's push for new legislation, the direction Mr. Muris takes on privacy could set the regulatory environment for years for numerous marketers.

"I think that what he says is very significant," said Dan Jaffe, executive vice president of the Association of National Advertisers. "The FTC always takes a lead on privacy, and what he says will be a guidepost for the Congress and executive branch."

Focus on terrorism
Complicating the privacy issue now is the new focus of government agencies -- including the FTC -- on terrorism following the Sept. 11 terrorist attacks.

While the FTC doesn't directly police terrorism, Mr. Muris is expected to discuss steps marketers can take to make identity theft more difficult and talk about enforcement actions the agency might use.

In an advisory issued the week of Sept. 24, the FTC said Mr. Muris will "unveil the specifics of how the commission plans to approach a number of issues of concern to the American public including: telemarketing, fraud, the Internet and credit information, ID theft, pretexting, the Fair Credit Reporting Act, the Children's Online Privacy Protection Act, negative options, rulemaking and legislation."

Privacy notices
The FTC last week also hinted at one of the decisions, announcing an interagency workshop to get financial institutions and credit card companies to more clearly spell out privacy rights under the Gramm-Leach-Bliley privacy legislation. Critics of the notices sent out to Americans last summer said the letters failed to clearly spell out rights and wrote the FTC asking it to step in. Mr. Muris is also expected to announce stepped up efforts to enforce existing privacy initiatives.

Mr. Muris' biggest decision will be on legislation. Last May a divided FTC, with Democrats in control, split 3-2 on whether to recommend Congress impose restrictions on the Web to preserve the privacy of adults. The majority said marketers hadn't gone far enough through self-regulation and that legislation was needed to set a minimum level of protection.

While one of the Republicans, Orson Swindle, opposed any legislation, a second, Thomas Leary, would have supported legislation but felt the measures should be limited to requiring that marketers give privacy notice while treating marketers on- and offline in a similar manner.

Mr. Muris' replacement in June of Mr. Pitofsky gave Republicans a 3-to-2 control of the commission.

Since Mr. Muris appointment, he has held many meetings with privacy groups and with representatives of marketers and industry on privacy. The meetings have produced uncertainty on what he will say.

Kremlin-like secrecy
"He has been holding cards close to the vest to the point where it has almost reached Kremlinologist standards," said Jason Catlett, president of Junkbuster.com and a privacy advocate.

While generally declining to predict the FTC's plans, Mr. Catlett said he expects the FTC to treat online and offline gathering of information in a similar manner.

Ad groups hope Mr. Muris will recognize the industry's self-regulatory efforts and concentrate on improving enforcement of existing policies.

"I am hopeful he will say that now is not the time for legislation, that we need to work with industry longer and that they are doing a lot of good things," said Jeff Perlman, executive vice president of the American Advertising Federation. "I think he will enforce the rules and deal with the opportunities the Internet opens up for unsavory characters."

Jerry Cerasale, senior vice president of the Direct Marketing Association, said he hopes the FTC won't be pushing a requirement that consumers opt in for collection of data. "The only thing I have heard is that he will look at the harm from the point of view of the damage done."

Mr. Catlett said he fears Mr. Muris will pull back on the former commission's request for legislation.

"If he were to come out and say the existing leading authority is adequate," Mr. Catlett said, "it would put a very different light on the privacy landscape."

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