Senators Push Privacy Bill Despite FTC Furor

Senators Push Privacy Bill Despite FTC Furor

Sen. Ernest Hollings

By Kerry Gildea, Contributing Writer

One day after the information technology industry and numerous members of Congress shot down a recommendation from the Federal Trade Commission calling for creation of online privacy legislation, a group of senators introduced a new bill to do just that.

Sen. Ernest "Fritz" Hollings,
D-S.C., ranking member of the Senate Commerce Committee,
Sen. John D. Rockefeller, D-W.Va., and eight other committee members on May 23 introduced the Consumer Privacy Protection Act of 2000. The legislation would establish federal standards for providing a privacy framework for online transactions.

The largely negative reaction from various lawmakers and the IT industry to the FTC recommendation failed to deter the 10 senators from promoting the bill they say will strike a good balance between the needs of consumers and e-businesses.

"The legislation that we are introducing will give consumers ? not companies ? control over their personal information on the Internet," said Hollings. "For many consumers, privacy concerns represent the only remaining obstacle
impeding their full embrace of
the Internet's ample commercial opportunities. Ensuring privacy
is good business, and establishing
a federal standard for these protections will allow us to address consumers' concerns before they pass up the growing Internet marketplace altogether."

The bill has been in the works for some time and is not a response to the FTC report, but similar to the failed FTC recommendation, it recognizes consumers' growing demand for privacy protections, said Andy Davis, an aide to Hollings. While it may be an "ambitious prospect" to get the bill passed, the senators intend to push it as far as possible this year, he noted.

There are no similar bills moving in the House. In fact, a number of House members have expressed staunch opposition to the idea and have blasted the FTC for bringing up the issue.

"The FTC has injected election-year politics into what should be a non-partisan issue," Rep. Bob Goodlatte, R-Va., said in a statement. "Last year, when the FTC urged a hands-off approach to the Internet, a mere fraction of Web sites posted privacy policies. Now that more than 90 percent of major Web sites are posting privacy policies, the FTC has discovered the need for new government regulations."

The IT industry's reaction to the FTC proposal was much the same. Harris Miller, president of the Information Technology Association of America, said the marketplace has responded on its own to privacy concerns and will continue to do so on its own.

"Every e-business understands how important privacy protection is to its customers," Miller said. "They also understand an alternative e-vendor is only a mouse click away if privacy is not protected."

Under the Hollings bill, companies operating on the Internet must clearly indicate how they collect personal information and how they intend to use it. They also must employ an affirmative consent ? an "opt-in" ? process before collecting or using such consumer information.

The companies also must provide consumers, upon request, with reasonable access to the personal information collected about them and offer the opportunity to correct, deny or supplement that information. And companies also must establish procedures to protect the security and confidentiality of the information.

The bill also establishes a research and development program on computer-security issues at the National Institute of Standards and Technology.

"The industry's recent efforts, the states' attempts to address privacy, and the overwhelming consumer demand for protections, all demonstrate that something needs to be done," Hollings said. "We believe that this legislation strikes a balance between asserting the appropriate federal role while recognizing the efforts of the industry."

But Hollings' bill and any other attempts to legislate online privacy faces tough sledding. Some opponents pointed to the slim margin of support for the recommendations within the FTC as further evidence a greater consensus has yet to be reached. The FTC report calling for online legislation was approved by a 3-2 vote, with Commissioner Orson Swindle dissenting and Commissioner Thomas B. Leary dissenting in part.

"This is no way to create good law" and legislation "should be reserved for problems the market cannot fix on its own," Swindle said in remarks included in the FTC report. He called the report "extremely flawed" and said it also lacks any consideration of the cost of implementing such legislation.

The Software & Information Industry Association said if enacted, the FTC recommendations would create severe costs and barriers to entry for e-commerce vendors and would destroy the momentum of an industry self-regulation effort.

"The FTC recommendations represent a potential giant step backward, not forward, for online consumers concerned about the privacy," SIIA President Ken Wasch said in a statement. "Two years ago only 14 percent of Web sites had privacy policies. Today, that number is 90 percent. E-commerce vendors understand that it is in their best interest to be predictable and transparent in their use of consumer information as consumers become more educated about privacy policies and their rights."

The Online Privacy Alliance also criticized the FTC, charging consumers already have significant privacy protections.

"Online businesses know that protecting consumer privacy is good business and the business of privacy is booming," said Christine Varney, an adviser to the alliance and a former FTC commissioner, in a statement. "Privacy policies are now ubiquitous online and these policies empower consumers to make informed choices about what personal information to share."

Web site owners know that effective privacy policies generate customer trust and are good for business, Varney added.

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