FTC study gives fuel for backers of Internet regs

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The Federal Trade Commission's examination of Web privacy, to be sent to Congress next month, threatens to dramatically increase pressure for government regulation of Internet privacy.

That warning was sounded last week by both Ira Magaziner, President Clinton's top policy adviser on the Internet, and H. Robert Wientzen, president of the Direct Marketing Association.

The FTC's report will reveal that relatively few marketers have adopted comprehensive privacy guidelines. Speaking at a DMA conference in Washington, Messrs. Magaziner and Wientzen said the report could make it appear marketers have left unheeded FTC Chairman Robert Pitofsky's request last July that they implement voluntary privacy regulation.

Mr. Magaziner headed a White House task force that urged a voluntary self-regulatory approach, and, nearly a year later, now says his own timetable for a July 1 follow-up report, the FTC report and a European Union privacy directive, to take effect Oct. 1, could make the momentum for government regulation unblockable.

`GOT TO PROTECT PRIVACY'

"What we are looking for is a significant number of associations and companies that make up the lion's share of what goes on the Internet to participate" in a privacy code, Mr. Magaziner said. "If that doesn't happen . . . there will be a secondary plan [of government-imposed regulation]. We have got to protect people's privacy."

While individual industry associations, including the DMA, have created their own privacy standards, Mr. Magaziner said something far broader is necessary.

He told both the DMA and members of the Privacy Alliance--a group of corporate leaders developing a plan that might create such a self-regulatory code--that a plan will only work if it's broadly based enough so that it includes: virtually all major marketers on the Web; a process for bringing and investigating complaints, and auditing site procedures; and a logo or mark that allows the public to readily identify subscribing members.

A process like that would allow the government to pursue the so-called "bad actor" sites that don't subscribe to the industry code.

AWARE OF THE URGENCY

Former FTC member Christine Varney, who heads the soon-to-be-renamed Privacy Alliance, said members are aware of the urgency.

"The industry is working hard to meet the July 1 deadline" of Mr. Magaziner reporting back to the president, she said. "We are working around the clock."

Alliance members include IBM Corp., AT&T Corp., Microsoft Corp. and numerous other corporations and associations, including the DMA.

An IBM spokeswoman suggested government needs to realize that electronic commerce is little more than 2 years old.

"We are working as fast as we can, but now would be too premature for broad-stroke legislation," she said. "We don't think broad legislation will work because it is so hard to enforce. We are developing mechanisms to deal with the issue."

Still, the pressure is building.

Last week, the Center for Media Education--whose complaint about data being gathered from children launched the FTC's look at Web privacy issues--called for legislation or FTC rules.

"We have been talking to industry about privacy, and there is a lot of denial going on," said President Kathryn Montgomery.

Also last week, Vice President Al Gore in a commencement speech at New York University called for Internet privacy regulation. He announced a long-delayed Commerce Department summit on industry privacy will take place in the next month.

The DMA has adopted rules that will bar membership by marketers that don't have a privacy policy in place by July 1999, but Mr. Wientzen told conference attendees only personal lobbying has any chance of forestalling government regulation.

Copyright May 1998, Crain Communications Inc.

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