Web privacy

[Steve Hoffman]

FTC TO WEB SITES: SHOW US YOUR PRIVACY POLICY 

Business Week 2/9/98


In July, 1997, consumer-protection chiefs at the Federal Trade
Commission issued a challenge to the nation's commercial Web sites:
By the end of March, 1998, a "substantial majority" of them should
display online privacy policies -- a statement of how a site uses,
analyzes, and shares consumer information -- or risk potential
regulation. A typical privacy policy tells visitors how the
information they provide about themselves will be used -- and how
they can influence its use. 

Next month, the agency will hold fact-finding "surf days" to
determine how widely the policies have been adopted. What the agency
turns up -- or doesn't -- could affect the government's eventual role
in policing cyberspace. "I continue to believe self-regulation is the
preferred course to follow," FTC Chairman Robert Pitofsky said on
Feb. 2. "If it fails, there will be no alternative except active
government participation." 

Just how many Web sites have privacy policies is unclear. But
industry experts say the number is far fewer than the "substantial
majority" the FTC expects to find. "We're running out of time, quite
frankly," says Susan Scott, executive director of Truste, a nonprofit
industry group that advocates audited privacy policies. "In our
minds, very little has been done since last June." 

Though any real regulation is still far away -- the FTC needs
congressonal authorization to broaden its powers over the Internet
-- the agency's increasing involvement in the digital marketplace has
put a scare into Net advocates. Netizens are nearly unanimous in
their distaste for federal intrusions, though they realize that
Washington must be appeased. They're also afraid they might squander
the chance to show the feds that the private sector, through trade
groups, grassroots campaigns, and technology standards, can keep
order in the digital world without help from Uncle Sam. "This a
litmus test on self-regulation for the Clinton Administration," says
Deirdre Mulligan, staff counsel at the Center for Democracy &
Technology in Washington. 

Such fears have helped mobilize a last-minute action by trade groups
and private think tanks, which have begun promoting Web-site privacy
policies as a preemptive defense against government regulation. The
Direct Marketing Assn. has been one of the most vocal proponents,
having debuted do-it-yourself privacy-statement software on its own
Web site last summer. Through Dec. 31, more than 4,200 copies of the
software had been downloaded. 

At Truste, Scott says she's highlighting the FTC's plans to nearly
everyone she speaks to. But she concedes that the Web's fragmented
structure has made it hard to get the word out. Take Jim Shanks,
vice-president for information technologies at CDW Computer Centers,
which runs CDW.com, one of the Web's most popular computer-buying
sites. Though he has heard "a little bit about" the FTC effort, he
has no plans to post a detailed privacy policy in time for the March
review. He says he wants to be careful about a specific privacy
statement, because it can be "open to a lot of interpretation." For
now, his site carries a brief reminder that the company "will never
sell or share your E-mail address or any of your personal
information with any outside source." 

The greatest scrutiny in the FTC's coming survey will be reserved
for children's Web sites. In "surf days" it held last October, the
agency found that 86% of 126 youth-oriented sites did not seek
parental permission before collecting children's personal data, such
as name, age, or address. That's likely to scare the 97% of parents
who believe Web sites should not collect or sell any information
about children. 

This puts Internet self-regulation advocates in a bind. While they
fear that government involvement could land them on a "slippery
slope" to expensive, unenforceable bureaucratic rules, they can't
come out strongly against measures protecting child safety. How
successful they are in staving off government intervention will
likely depend on how well Web sites can discipline themselves. 
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