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FTC Seeks Online Privacy Law From Congress

Internet: Report by the agency criticizes industry's self-regulation of Web sites that collect consumers' personal information.


WASHINGTON — Companies operating on the Internet have failed to adequately protect the privacy rights of consumers, the Federal Trade Commission said Monday, arguing that Congress should give the agency new powers to step into the breach.

In a report to Congress titled "Privacy Online: Fair Information Practices in the Electronic Marketplace," the FTC said a survey by the commission showed that fewer than half of the busiest U.S. Web sites provide basic privacy protections.

It recommended that Congress enact legislation to ensure a new law that would require Web sites that collect "personal identifying information" from consumers to comply with four typical standards in consumer law: notice, choice, access and security.

The online industry drew an immediate line in the sand, calling the proposal "extremely disappointing and entirely unnecessary."

Harris Miller, president of the Information Technology Assn. of America, based in Arlington, Va., noted that the industry plans to demonstrate new standards-based privacy protections within the next few weeks.

"Empowered users, not Washington bureaucrats, are best able to determine adequate privacy protections on the Internet," Miller said.

And congressional sources said the prospects of passage of such legislation this year are dim.

Rep. Edward J. Markey (D-Mass.) rated the chance of passage of such a bill in the Republican-controlled Congress as "virtually nil."

Sen. Ernest F. Hollings (D--S.C.), who is sponsoring an Internet privacy bill with eight other Democrats, said industry representatives so far have "nearly unanimously opposed even a basic regulatory framework" that would ensure consumer privacy on the Internet.

Even among members of the FTC's governing board, opinion was split 3 to 2, with dissenting Commissioner Orson Swindle calling the recommendation "an unwarranted reversal of its earlier acceptance of a self-regulatory approach" even in the face of "significant progress" in self-policing of Internet sites.

But FTC Chairman Robert Pitofsky, appointed by President Clinton in 1995, defended the proposal, saying too few Web sites meet basic standards of privacy protection, thereby "endangering consumer confidence."

And Rep. W.J. "Billy" Tauzin (R-La.), who chairs the House Commerce subcommittee on telecommunications, trade and consumer protection, said he met with Pitofsky and hasn't closed the door on new legislation if needed.

"We asked him to examine the scope of his authority to police bad players on the Internet," Tauzin told Associated Press.

The FTC survey looked at two groups of Web sites: those with at least 39,000 unique monthly visitors and the 100 most popular U.S. Web sites. The results showed that only 20% of the larger group and 42% of the most popular sites have implemented all four privacy protections.

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