FTC policy draft provokes debate about Web privacy

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Leaked statistics from a draft U.S. Federal Trade Commission survey of Web sites' privacy practices are provoking a fight over whether Congress needs to enact privacy legislation this year.

Marketing groups reacted to a report in The Wall Street Journal that said the FTC's survey found 90% of Web sites had posted privacy policies and only 20% meet all the agency's standards for privacy disclosure.

Advertising groups said the 90% figure proves self-regulation works.

"If it is true, it is awfully good," said John Kamp, senior VP of the American Association of Advertising Agencies, noting that the last survey of Web sites for the FTC ,done a year ago showed 67% of sites had such policies.

ADVOCATING LEGISLATION

Privacy advocates, however, suggested that statistics showing only 20% of sites meet FTC standards for their policies means that legislation is vital.

"Very few sites provide access [to information the site has collected], and they aren't likely to provide it voluntarily," said Jason Catlett, president of Junkbusters, a commercial site that offers privacy tools. "It has to be imposed."

The FTC's privacy study, due the last week of May, has been eagerly awaited by marketers, privacy advocates and some congressional leaders. Marketers hope the survey, the third from the FTC, will demonstrate the industry's great progress in achieving the goals of privacy via industry self-regulation and so lessen pressure for privacy legislation.

Privacy critics, however, hope the FTC finally is ready to propose such legislation. The FTC, they said, which twice before has given the industry additional time to act, may be losing its patience. A year ago FTC Commissioner Sheila Foster called for legislation.

ACCESS, SECURITY

Complicating the issue of industry compliance is a question about how to look at two major privacy principles the FTC wants marketers to adopt as part of their privacy programs: access and security.

While the FTC has said Web marketers must give consumers the opportunity to see and correct data the marketers collect, and that marketers provide security to ensure that information can't be obtained by others, the agency has set few standards on exactly what is required to meet those goals.

FTC REPORT DUE TODAY

An FTC task force looking at access and security issues is due to deliver an advisory report today and, according to a draft, warns that increasing access poses the risk of increasing security problems, with issues such as verification and multiple use of a single computer by different people all presenting significant challenges. The task force, which included representatives from marketers, technology companies and consumer advocates, offered a number of possible choices for the FTC, but made no particular recommendation.

Marketers said that until the FTC decides what to require, looking at how well marketers are complying with access and security issues makes no sense.

"If you are going to do a qualitative analysis, you have to analyze against what is known," said Dan Jaffe, exec VP of the Association of National Advertisers. "The numbers game could be very misleading."

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