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FTC gives privacy mandate
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July 21, 1998: 5:15 p.m. ET
Agency threatens regulation if Web sites don't put in rules by year's end
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NEW YORK (CNNfn) - The Federal Trade Commission Tuesday threatened the online industry with regulations if commercial Web sites don't formulate their own rules to protect consumer privacy by year's end.
FTC Chairman Robert Pitofsky told Congress the agency would give online merchants one more chance to regulate themselves. If that fails, Pitofsky urged lawmakers to put into law its list of recommendations to ensure Internet privacy.
In an interview Tuesday afternoon, FTC Commissioner Mozelle Thompson said although the agency is disappointed with the progress of industry efforts, there have been encouraging signs.
Thompson said the biggest concern with the industry's plan is it doesn't address the vast majority of sites on the Internet.
"Although the latest proposals purport to represent up to 50 Web sites, there's still no answer about what to do about the vast majority of web sites not ascribed to a privacy policy," he said.
Thompson said online publishers haven't said how they would enforce their own rules.
FTC may push own version
Thompson said unless the industry and regulators can reach a comprise by year's end, the FTC will ask Congress to pass legislation based on its recommendations.
The legislation would give individuals access to their personal information so they can correct any mistakes and also allow them to decide whether or not to provide it. Rules also need to give consumers recourse against the company if they feel a company violates its own policies.
The FTC's proposal does not specify which regulatory agency should be responsible for enforcement. It also provides exemptions for companies which, by themselves or as a member of a multi-company alliance, come up with their own privacy guidelines.
"This rewards companies who really take action to protect consumer privacy rights. It also provides flexibility for changing technologies," Thompson said.
Protecting children key component
Another area of great concern to the FTC is ensuring children's information is protected. The guidelines would require sites to get parental permission before information is collected from children under 12 that would allow someone to contact a child off-line.
Thompson said many members of the industry have worked with regulators, but they need to find ways to get a larger portion of the industry involved.
"We're not just concerned about [high-traffic] sites, but all sites. If consumers are gong to feel comfortable, they need to know they have some basic privacy protections," he said.
Industry: Self-regulation can work
Representing the industry in the talks has been the Online Privacy Alliance, a coalition of more than 50 companies and associations. In addition to technology firms, the group's members also include non-tech concerns like Proctor & Gamble Co. and The U.S. Chamber of Commerce.
Harriet Pearson, director of public affairs for alliance member IBM Corp., (IBM) remains confident the industry will lead the charge.
"I have detected an enormous increase in commitment and I think the work put on the table is proof of that. There's still a long way to go, but we've set out a template for what we think is good behavior. Now, we have to talk to others in the industry," Pearson said.
The alliance's guidelines ask sites to post an privacy policy that's easy to read and understand, make clear what information is collected and what is done with it, give consumers the option not to divulge the information and keep the information secure.
In cases where more personal information, such as medical records or financial details, are involved, consumers should have access to those records and be able to correct any errors.
Pearson concedes it will be more difficult to ensure smaller organizations adhere to acceptable privacy guidelines.
"We hope these guidelines will be reasonable techniques that small businesses can use," she said.
The FTC's Thompson remains optimistic the two sides can reach an agreement.
"As big as the Internet is, there is going to be a variety of viewpoints among industry. The model we put forth at least establishes a baseline of responsibilities and activities we think are necessary to make consumers feel comfortable and safe," he said.
-- by staff writer Cyrus Afzali
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