Online privacy rules proposed to ease threat to e-commerce

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Worried that privacy concerns represent a growing threat to Internet commerce, dozens of leading technology companies, advertisers and direct marketers are forming an alliance to promote self-regulation.

Former Federal Trade Commission member Christine Varney is expected to be named next month to head what is tentatively being called the Privacy Alliance.

At a meeting last week in Washington, 50 representatives of companies including America Online, Hewlett-Packard Co., IBM Corp., Microsoft Corp. and associations representing advertisers, direct marketers and Internet service providers agreed to join together to create privacy guidelines.


Final organizational details are expected to be ironed out at another meeting this week. Several executives who attended last week's session said working groups are already being formed to draft a set of privacy standards over the next six months.

After the standards are established, the group's members would use their combined clout to encourage marketers and all others using the Web to gather information to follow the standards. Still uncertain is how violations would be punished.

"A big part of this is evangelizing to the rest of the Internet," said Brian O'Shaughnessy, director of public policy for the Interactive Services Association, and one of those who attended the meeting. "The Privacy Alliance is an opportunity to cooperate with privacy advocates and consumer groups on a thread that ties us together."

Mr. O'Shaughnessy and others in attendance who declined to be named said the group feels an industrywide effort to develop broad-based standards would help boost public confidence in Internet commerce.


It also might help the industry allay government concerns. Government pressure could mount in June, when the FTC issues its report to Congress documenting whether marketers have yet implemented privacy policies on their Web pages.

A Clinton administration report on global commerce released last year recommended the U.S. try to hold off other countries pushing for privacy regulation by encouraging "industry-developed solutions to privacy problems."


The Department of Commerce in a subsequent expansion on the report suggested that "to be meaningful" self-regulatory procedures needed to "invoke substantive rules as well as [establish] the means to ensure that consumers know the rules, that companies comply with them and that consumers have appropriate recourse when injuries result from non-compliance."


The Privacy Alliance aims to do just that, members said, adding they will develop such guidelines before October, when a European Union privacy directive takes effect that bars the transfer of readable personal information from one country to another that doesn't have an acceptable privacy regulation plan.

"I am glad [the alliance is] focusing on the issue, but I am concerned that they may want self-regulation over privacy protection," said Marc Rotenberg, director of the Electronic Privacy Information Center. "The goal has to be privacy protection. The European directive is a not so much a problem as a reminder that there is a need for real privacy safeguards in this country."

Copyright April 1998, Crain Communications Inc.

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