On-Line Industry Pushes Privacy

New privacy regimes may fend off government regulation while calming on-line consumers' concerns

Several companies selling goods over the Internet have established a new privacy regime intended to avert government regulation and preserve the ability of companies to gather consumer-related marketing data.

Under the new eTrust system, on-line vendors can display on World Wide Web pages eTrust logos guaranteeing privacy protections to customers. The eTrust logos are proprietary and can be displayed only by companies that sign a contract exposing them to expensive lawsuits should they violate the eTrust privacy rules.

To build credibility among Internet users, the eTrust scheme is backed by the libertarian Electronic Frontier Foundation, a San Francisco-based group, which was established to minimize government regulation of the Internet.

Although customers don't mind companies collecting some information about their activities, "they get upset when they don't know what is going on," said John Pettitt, chief technology officer at Cybersource Corp., Menlo Park, Calif., which sells software via the Internet, and helped found eTrust.

Using simple software, a company can gather much information about its customers by recording what Web pages they visit, what products they buy or what credit card information they release. This information is valuable because it allows a company to aim tailored marketing messages at its on-line customers.

But the information also threatens the privacy of Internet users who generally do not want others to know of electronic visits to sex- or health-related Web sites.

The eTrust system includes several logos, allowing companies to display the privacy protection they offer to consumers. One merchant may offer complete anonymity to his customers, while another may guarantee only that he will not sell data to a marketing company, for example.

The eTrust system was unveiled only one month after the industry-funded Interactive Services Association in Silver Spring, Md., announced that it was preparing voluntary privacy guidelines in cooperation with the Direct Marketing Association.

These voluntary guidelines were developed after industry officials saw how public concern over sex-related Web sites spawned the controversial Internet-smut law authored by Sen. James Exon, D-Neb.

Growing public concern over the collection personal data gathered by Internet companies may result in the industry being "Exoned" by government privacy rules, said one industry executive.

"It is possible we could have legislation and regulation... [but the government] is willing to give industry a chance to see what it can do" to protect consumers' personal data, said Sara Fitzgerald, a spokeswoman for the ISA.

Industry's concerns were heightened by the Federal Trade Commission's growing interest in on-line privacy issues. The FTC held a public hearing regarding on-line privacy in early June, but FTC officials say they have no plans yet to issue any rules.

Although ISA's guidelines are voluntary, if a company violates its commitment to obey the guidelines, "conceivably, we could take action against them, or might ask them not to do so," said Fitzgerald. But, "I don't think [the ISA privacy system] has any teeth," said Pettitt.

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