August 1, 1997 1:50 PM PDT

Netizens blast FTC privacy report

Privacy advocates are charging today that the Federal Trade Commission is underestimating consumers' desire for new laws to protect online privacy.

In a letter sent yesterday to Senate and House members, the FTC did not recommend that Congress take immediate action to regulate how personal information is collected in cyberspace or how the data is subsequently used. Instead, the FTC said industry self-regulatory efforts should be monitored for one more year and identified models it said are working now as possible solutions.

Consumer advocates are disputing the FTC's report in a letter that will be sent later today to Sen. John McCain (R--Arizona) chairman of the Senate Commerce Committee.

"Instead of reporting the clear results of the survey research presented and the views expressed by groups representing consumers at the FTC hearing, the FTC chose instead to present the views of industry lobbyists as if they were the views of American consumers. Such a misrepresentation could be considered 'fraudulent and deceptive,' to borrow a phrase that should be well known to the FTC," states a draft of the letter to McCain signed by Electronic Privacy Information Center, Consumer Project on Technology, Consumer Federation of America, Privacy Times, and other groups.

Upon Congress's request, the FTC held a four-day online privacy workshop in June to investigate companies' current data collection practices from Net users. Consumer groups, law enforcement officials, privacy advocates, and research firms all presented evidence that called for more privacy protections in cyberspace. In contrast, online companies shared their range of voluntary guidelines, disclosure, and usage practices for personal details forfeited from surfers.

Yesterday's FTC report to Congress stated, "Consumer survey research presented at the workshop indicates they are looking for greater protections, preferably from voluntary efforts by industry, but if necessary from government."

Data from the same survey the FTC is citing, however, also stated that when computer users were offered three choices as to how the government should protect online privacy, 58 percent said they "feel that the government should pass laws now on how personal information can be collected and used on the Internet."

Louis, Harris & Associates and Dr. Alan Westin of Columbia University conducted the survey which also found that only 15 percent of those surveyed thought the government should let the online industry develop voluntary rules for protecting privacy, instead of passing laws.

"The FTC's assessment of consumer privacy issues, as expressed to you in the letter of July 31, contrasts sharply with the reality of the online world," the privacy advocates letter states. "Indeed, in between the FTC workshop and the letter sent to you, America Online was widely cited for its failure to uphold basic privacy assurances provided in its own Terms of Service agreement with customers." (See related story)

A major participant at the FTC workshop, the Center for Democracy and Technology, was also surprised by the FTC's representation of consumer attitudes toward government regulation in the area of online privacy.

"That was the one line in this letter that I thought was inaccurate. One of the loudest wake-up calls for the business community was that consumers preferred government response in this area--even people who spent a lot of time on the Internet," said Deirdre Mulligan staff counsel for CDT.

The FTC says that it wasn't trying to hide anything from Congress, rather it wanted to put the survey responses in context based on other reports about consumers' lack of familiarity with industry self-regulation efforts. The FTC also said the Commerce Committees will get copies of all the surveys and can read the results themselves.

"Our interpretation is that the surveys demonstrated consumers' frustration with the state of online privacy," David Medine, FTC associate director of credit practices, told CNET's NEWS.COM. "Given the general public view that government should not step in unless absolutely necessary our effort has been to work with online firms to increase consumer protections. To date, consumers aren't aware of those efforts so they're calling for government regulation. But we are aware of those efforts and we hope to see them come to fruition in the coming year."

FTC Net guru and commissioner, Christine Varney, who is leaving her post next Tuesday, added that the FTC might consider sending an amended copy of the letter to Congress to give more details about consumers' opinions on new privacy laws.

The FTC said it will continue monitoring self-regulatory efforts in all sectors of online data collection and report to Congress again next June. By the end of the year, it will also submit a full report and recommendation about "look-up" online databases, which let companies or individuals gain access to detailed information such as a person's address, phone number, birth date, employment history, or the names of people in his or her household.

"By the close of 1997 when it reports on databases, it wouldn't surprise me if they made recommendations to Congress," Mulligan said. "The FTC efforts still show that it is trying to work within its jurisdiction in all these areas."

Earlier this month, the FTC released some guidelines for compiling children's personal information online. The agency said Web sites must now obtain parental permission before distributing private data about a child to a third party, and clearly disclose to parents how the data will be used. Violation of these guidelines could be deemed as an unfair and deceptive practice, but the commission staff letter didn't recommend agency enforcement at this time.

The commission said it will also crack down on senders of fraudulent bulk email.

Even though the agency has set up some guidelines for online data collection, privacy and children's advocates still say it's not enough. "People need legal rights, the law has lagged behind the technology, and self-regulation hasn't worked," said Marc Rotenberg EPIC's director.

The signatories of the letter to McCain feel that new laws are needed. "Plenty of evidence was presented that the online industry has failed to develop adequate privacy safeguards for customers, and that even where standards are established they are often ignored," the letter states. "People have lost jobs. People have been stalked. Incorrect information is routinely disclosed. Personal information is sold to strangers but is unavailable to the person to whom it refers."

 

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