PRIVACY GROUPS READY TO SEEK FTC REGS FOR ONLINE BIZ: CURRENT ATTEMPTS AT SELF-REGULATION CRITICIZED AS INADEQUATE

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Some privacy groups said they will use Federal Trade Commission hearings this week as a stage for new attacks on business for its handling of online privacy and kids marketing issues.

Existing industry efforts at self-regulation will be a target, privacy group leaders said last week.

"The record is abundantly clear that the Federal Trade Commission and Congress need to create rules to protect children's privacy online. It's clear self-regulation is ineffective and the government must set the floor," said Jeff Chester, executive director of the Center for Media Education.

TEST OF SELF-REGULATION

Some FTC members also see the hearings as a potentially critical progress report on the ability of self-regulation to handle these issues.

"Last year we examined the issues and the industry said, 'Let us take a crack at self-regulation.' Now, one year later, we are examining whether they were able to create self-regulatory or technological tools to protect consumers' privacy," said FTC Commissioner Christine Varney.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, said that, while disclosure requirements may be sufficient for actual transactions on the Web, the government by regulation should protect the ability of Web surfers to anonymously visit and page through a site prior to any transaction taking place.

"We think there should be enforceable rights of privacy preserving the rights of anonymity," he said. "It's like walking into a store. Very few businesses keep you out as you enter."

Both views challenge some of the new programs and technologies industry groups plan to publicize at the hearings. The Direct Marketing Association; Interactive Services Association; the Children's Advertising Review Unit of the Council of Better Business Bureaus; and an ad hoc group of database companies that includes Lexis-Nexis are each backing private sector solutions to privacy and kids marketing issues.

As a substitute for new government regulation, most of those new codes propose making sites disclose what information they are tracking and how the information will be used. They also give adults the right to prevent any information gathered from being sold. Only in CARU's child site guidelines is there more specific language about what a marketer can and can't do at a site that is aimed at children.

INADEQUATE GUIDELINES

Critics will argue such moves are inadequate.

"What we are looking for is ways for people to conduct business, without having to give up personal information," said Mr. Rotenberg.

The FTC is looking into four areas: What kind of personal database information marketers can gather and publicly offer; the kind of privacy disclosure that should be required for any data tracked; the extent of special restrictions on marketing and information at sites aimed at kids; and possible restrictions on unsolicited e-mails from marketers or bulk mailers.

Online information collection and database security concerns became an issue last year following news reports about personal information that was being made available through Lexis-Nexis' P-Track service.

A database industry ad hoc coalition this week is to announce a new policy to limit the kind of information made available publicly as opposed to that provided to subscribers. The coalition includes Lexis-Nexis, MetroMail and major credit industry database providers.

Also due to be unveiled are several new technologies aimed at increasing computer users' ability to choose between privacy options (see related story on Page 36).

NEED SEEN FOR BROADER RIGHTS

Since initial FTC privacy hearings a year ago, major marketing and online business groups have become increasingly convinced that broader consumer privacy rights were needed to fuel future growth in Web commerce.

In March, a Boston Consulting Group study for eTRUST, a coalition between CommerceNet and the Electronic Frontier Foundation that is promoting its privacy seal of approval program for Web sites, suggested consumers would be much more willing to buy online if they felt the privacy of their personal information was

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