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Source: Excite News

Posted on July 27, 2000

      Hoping to ease public concerns about online privacy, the government on Thursday approved a plan drafted by Internet advertisers to regulate the gathering of information used to profile Web customers. The Federal Trade Commission voted 4-1 to endorse a self-regulatory plan submitted by the Network Advertising Initiative, a consortium of major Internet advertising companies. Privacy advocates objected, calling it "written by industry for industry" and saying it fails to adequately address the issue.

      The plan takes effect immediately but still contains vague language with few details. It requires Web advertising companies to notify customers of their Internet profiling activities and give customers the chance to choose whether their Web habits, interests, and personally identifiable information can be stored and used by advertisers.

      The companies also would promise to give consumers "reasonable access" to personally identifiable information collected about them and make "reasonable efforts" to protect the data they collect.

      "Industry self-regulation must play a central part in protecting consumer online privacy," said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection. FTC spokesman Eric London said the commission's vote applauds the NAI's plan, but the agreement does not have the force of law. Congress still would have to pass online profiling legislation before the FTC could enforce it.

      The FTC's action pleased advertisers.

      "I think this agreement is terrific," said Josh Isay, spokesman for DoubleClick, the largest Internet advertising network and a major force in NAI. "It both protects user privacy online and allows the Internet to thrive with effective advertising to keep the Web free."

      Privacy experts said the plan fails to adequately notify consumers about the activities of Internet advertisers. They also objected to the way consumers will have to "opt-out" of most profiling methods instead of choosing to be profiled willingly.

      "Individuals aren't being given a fair opportunity to learn what's going on," said Ari Schwartz, policy analyst at the Washington-based Center for Democracy and Technology.

      Marc Rotenberg, president of the Electronic Privacy Information Center in San Francisco, said his group is considering legal action to force the FTC to take stronger steps. "The FTC agreement seems to say check a box and profile away and leave the industry alone," he said.

      FTC officials said under the NAI standards, consumers will be:

  • Allowed to opt out of the collection of anonymous data on the Internet for the purpose of profiling.
  • Given a chance to determine if they want to allow previously collected anonymous data to be merged with personally identifying information.
  • Allowed to give permission for the collection of personally identifying information at the time and place it is gathered on the Internet.

      Critics were especially concerned about wording in the agreement that allows advertisers to merge information such as names and addresses with online browsing habits. Under the agreement, consumers would also have to choose to opt out of that, rather than choosing to participate.

      DoubleClick recently merged with a major mail-order company, Abacus, and critics fear that DoubleClick could use that database of tens of millions of customers in their online profiling. Both DoubleClick and another major advertiser, Engage Technologies, assure consumers that it will not happen soon.

      "DoubleClick is focused on anonymous products," Isay said. "We have no plans to link names or other personally identifiable information with Web activity across sites."

      The agreement also calls for consumers to have "reasonable access" to their profile developed by an ad companies. Both Engage and DoubleClick said that it is a complicated issue, citing competitive and security concerns, but they expect the NAI to agree on how that will work within six months. The lone dissenting vote came from FTC Commissioner Orson Swindle, who argued with the agency's recommendation for privacy legislation to regulate the few advertisers that are not NAI members.

      The FTC two months ago pressed Congress for legislation requiring commercial Web sites to notify visitors of what information is collected about them and how it will be used; the option to choose whether information can be shared; and access to review information collected by a site and security of that information. There are several online privacy bills currently in Congress.

      Several members of Congress applauded the NAI-developed principles. "I believe this agreement will help to bolster consumer confidence, without resorting to heavy-handed government regulations," said Rep. Billy Tauzin, R-La., who has been a leader in privacy issues on Capitol Hill.

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