FTC Seeking Net Privacy Regulation

In a step that has sparked debate across all corners of the political landscape, the U.S. Federal Trade Commission (FTC) voted Friday to ask Congress for the authority to impose stiffer regulations to protect consumer privacy online.

The FTC’s latest attempt to involve government in online commerce stems partly from results of surveys conducted by the Commission, indicating that although almost 90 percent of Web sites post privacy policies, only about 20 percent meet FTC standards for adequately protecting consumer privacy.

If the agency is successful in its quest for greater regulatory power, the autonomy of online companies may be severely limited.

FTC Contradicting Itself?

The legislation would allow the FTC to implement and enforce “fair information principles” originally developed as guidelines for industry self-regulation that parallel the rules of fair-credit reporting. Those principles include providing notice to consumers about the kinds of privacy policies followed by each Web site, and allowing consumers access to the information that companies keep about them.

The FTC is also in favor of regulating the manner in which information about consumers is passed to third parties.

However, the proposal to Congress would seem to contradict the Commission’s longstanding position in support of industry self-regulation. On Thursday, Jodie Bernstein, director of the Commission’s Bureau of Consumer Protection, told Congress that “The Commission’s online privacy efforts have been directed in large measure toward engaging the private sector in addressing these concerns, to ensure the continued growth of the online marketplace.”

Pressure From the White House

The Clinton administration has indicated a desire for closer scrutiny of privacy issues, possibly prompting the FTC to take a more aggressive approach.

While the White House is expected to support the FTC’s overall goal for adequate consumer privacy, sources familiar with the situation say the administration is not likely to back the agency’s specific recommendations.

Lack of White House support could seriously undermine the FTC’s already difficult task of winning passage for its proposed legislation in Congress. Some observers say the administration’s stance could foster cooperation between the White House and congressional Republicans on a less ambitious privacy agenda — since the GOP is currently divided on the issue.

Industry Leaders Speak Up

Advocates of self-regulation are clamoring to be heard before the FTC officially makes its proposal. Over the weekend, Robert Wientzen, president and chief executive of the Direct Marketing Association said, “Clearly, self-regulation has taken hold with lightning speed.”

Meanwhile, Harris Miller, president of the Information Technology Association of America (ITAA), labeled the FTC’s intentions as “a first step down the slippery slope of government regulation of the Internet.”

Party Politics

Even before the FTC makes its appeal to Congress, some Republican lawmakers have come out swinging, accusing the Clinton administration of playing “big brother” in the online marketplace.

At a retreat this weekend for Republican lawmakers to study privacy issues, Representative Bob Goodlatte (R-Virginia) said the government already has checks and balances in place to closely monitor privacy issues. Goodlatte suggests the FTC and Justice Department roles in privacy enforcement should be reviewed “before jumping into further legislation.”

According to Representative Billy Tauzin (R-Louisiana), chairman of the House Commerce subcommittee that oversees privacy, laws have already been enacted to protect consumer privacy, most recently in the area of financial services.

“It’s good for companies to be secure and many are exploring new self regulation systems,” Tauzin said. “More and more companies are adopting policies of not doing business with companies that don’t have good privacy policies.”