FTC Investigates Amazon, Yahoo!

The U.S. Federal Trade Commission (FTC) has launched investigations into the consumer information practices of Internet powerhouses Yahoo! and Amazon.com.

In its annual report filed with the U.S. Securities and Exchange Commission (SEC), Yahoo! revealed that the FTC has asked the company for information to see if it is in compliance with federal consumer protection laws.

“We were contacted by the FTC and asked to help them understand our data collection practices,” said Diane Hunt, a Yahoo! spokesperson. Hunt said the company believes the inquiry resulted from a report from the California Healthcare Foundation, which earlier this year was critical of the privacy policies of 21 health-related Web sites, including Yahoo!.

The Foundation focused on HealthCentral.com, a Yahoo! partner, pointing out that consumers are not informed that their personal information is being collected. It was also critical of Yahoo! for not informing users that it sends data from a personal health test to a server at HealthCentral.com instead of storing it on its own server.

“We are voluntarily providing information to the FTC,” Hunt said. “We take privacy very seriously and are very committed to it and are proud of our record in that area.”

In its filing with the SEC, Yahoo! indicated that it posts privacy policies concerning the use and disclosure of consumer data.

The investigation may also include Yahoo! subsidiary GeoCities, a company that assists in the setup of individual users’ Web sites. GeoCities has already had one encounter with the FTC, resulting in its taking steps to change the way it collects and distributes information about its customers.

FTC Probes Amazon’s Software

Amazon.com revealed that the FTC is formally investigating a company software division that collects information about how people use the Internet.

In February, the FTC conducted an informal inquiry into Amazon’s Alexa Internet division. Alexa software monitors Internet users as they navigate Web sites to provide information about visited pages and to suggest related sites.

The FTC’s initial review sought to determine if the use of Alexa software amounted to Amazon’s engagement in “unfair or deceptive acts.” Neither the FTC nor Amazon has commented on the investigation.

Value America Ads Targeted

Meanwhile, another high profile online retailer, Value America, Inc., revealed yesterday that the FTC is investigating its advertising of free and reduced-price personal computer systems. The offer is contingent upon customers subscribing to an Internet service provider’s services for a set period.

FTC officials are concerned that the contingency is not properly disclosed to consumers. The news of the probe came in Value America, Inc.’s annual report, saying that it has released documents to the FTC and is awaiting any further request for information.

The company appears to be downplaying the probe. Chief Financial Officer Michael Waide said his company was just one of many being investigated on the matter.

“We believe we were contacted for informational purposes,” he said.

FTC Increasingly Targets E-Companies

With the high profile investigation of online advertising agency DoubleClick also underway, the FTC appears to be taking a much stronger interest in online companies’ business practices.

So far, the Clinton administration continues to urge U.S. companies to regulate themselves regarding customer privacy. However, increasing governmental intervention into online companies has caused many industry observers to note that Internet privacy legislation may be inevitable.