U.S. Government Intensifies Online Privacy Efforts

Online consumers’ privacy and protection are coming under close scrutiny in Washington, D.C. this week, as a number of government officials have apparently come to believe that the industry may never be able to regulate itself.

First, Federal Trade Commission (FTC) chairman Robert Pitofsky said Wednesday that identity theft is hampering the full growth of electronic commerce. Pitofsky claimed that 61 percent of people who surf the Internet do not make purchases out of fear for the security of their private information — and 90 percent of those who do buy goods online have expressed concerns about doing so.

The FTC’s hotline for consumers to report identity fraud is logging 400 calls per week, a figure Pitofsky expects to grow to 200,000 calls each year. The Social Security Administration has a similar hotline that reportedly received 39,000 complaints of misuse of individuals’ Social Security numbers in 1999.

Speaking at the U.S. national summit on identity theft, Pitofsky said much of the increase in identify theft has occurred “because of modern credit systems and growth of commerce on the Internet. To the extent that identity theft prevents the Internet from reaching its full potential, then we have all suffered real harm.”

Compounding the problem may be the just-announced agreement between the U.S. and the European Union to exchange data under new “safe harbor” guidelines. Pitofsky acknowledged that the FTC might not have the resources to regulate compliance of U.S. companies that exchange personal information about European citizens under the agreement.

In 1998, Congress made identity theft a federal crime that carries a maximum sentence of 15 years. Twenty-two U.S. states also have laws on the books against the practice.

Consumers Need Protection with E-Signatures

Also this week, U.S. Treasury Under Secretary Gary Gensler said a legislative drive to foster electronic commerce by validating the use of electronic signatures must not lose sight of the need for consumer protection.

Both the House of Representatives and the Senate passed electronic signature bills last year that are headed for a conference committee to seek an acceptable compromise. However, Gensler warned that, “We should not take this step unless we can continue to provide the consumer protections that Congress and the states have previously enacted.”

Speaking to the Bank and Financial Analysts Association in New York on Wednesday, Gensler said the Treasury Department is working with Congress to develop laws to promote e-commerce by permitting contracts to be completed by using electronic signatures instead of paper.

Privacy Debate Rages On

Meanwhile, U.S. Congressmen Asa Hutchinson and Jim Moran have introduced legislation to create a bipartisan privacy protection commission. The focus of the proposed panel would be online privacy, identity theft and the protection of health, medical, financial and governmental records.

The Hutchinson-Moran commission would be made up of 17 members of Congress and would study current laws, conduct field hearings around the United States and report to Congress on its findings and recommendations for regulatory and legislative reform.

Although there are several privacy-related bills circulating Capitol Hill, none has yet gained widespread support among legislators.