FTC Likely to Step In on Privacy Issues

The New York Times reports that the Federal Trade Commission has “all but decided” that it is going to part company with the Clinton administration over the contention that Internet businesses can regulate their own privacy policies.

“We are losing patience with self-regulation,” David Medine, an associate director in the commission’s Bureau of Consumer Protection, was quoted as saying. “It’s too bad, but I think industry has lost the opportunity to show that they will do it on their own.”

Last spring, dozens of FTC lawyers spent two weeks on the Web, looking for privacy problems.

Their intention was to find Web sites that collected personal information from visitors but neglected to post any notice about how that information would be used, the Times said. The presumption was that many of the companies sold the information–some of it highly personal data on health, income and personal preferences–to Internet-list brokers, merchants and advertisers, the Times said.

More than 90% of the roughly 1,400 sites examined collected personal information from visitors, but only 14% of them disclosed how that information would be used, convincing the FTC that formal regulation would probably be necessary.

For more than a year, the Clinton White House had been saying that businesses using the Internet should be allowed to regulate themselves.

“If there’s ever an arena that should be market driven, this is it,” Ira Magaziner, President Clinton’s adviser on Internet issues, said as the White House announced its Internet policy last year.

But now, several senior FTC officials said the agency will give the industry just a few more months to demonstrate that it is effectively regulating itself before moving to enact legislation.