June 11, 1997 2:30 PM PDT

Privacy forum plugs disclosure

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Report blasts companies on privacy

June 9, 1997
WASHINGTON--Disclosure, disclosure, disclosure was the mantra of today's Federal Trade Commission session on consumer online privacy.

The agency is pushing for the release of online data-collection practices to allay consumer fears and ensure the growth of the electronic marketplace.

A study released during the session today supported that conclusion. Polling firm Louis Harris and Associates found that, although only 5 percent of Internet users say their online privacy has been invaded, more than half are afraid that their surfing will be tracked without their knowledge. Sixty-three percent said they would supply data but only if they knew how it would be used.

"Online users want some privacy law in the computer frontier," said Dr. Alan Westin of Columbia University, who also authored the report. "[The] online industry is going to have to find ways to earn trust in their online deeds."

Based on a survey of 1,009 computer users, 58 percent of respondents said the government should pass laws on how personal details can be collected and used.

But it won't be easy. Computer users who most favor government regulation are least familiar with the Net, the study goes on to say.

America Online, American Express, MCI Communications, and Netcom On-Line Communications Services were among the sponsors. Other research groups such as Cyber Dialogue and the Georgia Institute of Technology's Graphics, Visualization, and Usability Center supported the findings.

Like most industries, online businesses want to take a stab at solving their problems before the government steps in.

McGraw-Hill, for example, announced its online privacy policy today and was applauded by the commission.

"First and foremost, we recognize our obligation to handle personally identifiable information of our customers in a diligent, responsible, and ethical manner," said McGraw's chief executive Joseph Dionne, who introduced the policy at the workshop. "Second, we recognize that there are legitimate business uses of personally identifiable information which are beneficial both to us and our customers."

McGraw said it will inform Web site visitors how data will be collected and used, allow them to refuse the use of their data, and would not distribute "sensitive data" such as Social Security numbers or mother's maiden names to third parties.

Other information such as email addresses, billing information, employment status, job description, or birth dates could be given to companies with whom McGraw has business relationships. McGraw also collects information about children who use its materials.

McGraw-Hill also said it would launch an online financial service this year. Data about what kinds of investments surfers seek information could also be collected.

The FTC is using the week to grade self-regulatory efforts like McGraw's before making a recommendation to Congress.

In another such effort, the Direct Marketing Association has drafted disclosure standards for its members, but its policy is not mandatory.

"We are going to lean on you to get them broadly implemented whether or not it's mandatory--or some other mechanism," Commissioner Christine Varney told the DMA.

DMA president Robert Wientzen promised that 80 percent of its members' Web sites would be in compliance by next June.

Netscape also reported its efforts to self-regulate, such as blocking third-party cookies with its new 4.0 browser.

Cookies are stored on Net users' hard drives, allowing Web sites to track their surfing preferences or simply store registration information so it doesn't have to be reentered each time a person visits the site.

The practice is viewed as an invasion of privacy by some because users usually don't know when they've eaten a cookie. Third-party cookies are even more anonymous.

For example, if a surfer goes to an online search engine site, such as Infoseek, he could be sent a cookie by the sites' advertisers.

 

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