Internet Privacy Issue a Priority for Trade Panel

TIMES STAFF WRITER

The Federal Trade Commission's Mozelle Thompson is taking on children's Internet privacy--one baby step at a time.

A former principal deputy assistant secretary of the Treasury, Thompson was named commissioner in December. He is only the second African American to serve on the panel, which is charged with enforcing federal antitrust and consumer protection laws.

The 43-year-old Columbia Law School graduate already has earned a reputation as a cautious critic, whom politicians from both parties call both savvy and thoughtful.

He'd better be. The FTC has come under increasing pressure from consumer groups to monitor corporate America's current merger mania and to become a forceful player in today's rapidly evolving digital culture.

The commission stepped to the plate last week when it took on Intel Corp. In a move that could affect competition in the computer industry, the FTC filed suit against the Santa Clara-based chip giant, accusing it of monopolistic practices.

And then there's online privacy. The FTC is auditing U.S. privacy policies in response to outcry in the last year over issues ranging from the Social Security Administration's lack of security in making personal earnings and benefit records available on its Web site to Lexis-Nexis P-Trak service's sale of people's birth dates and other data to anyone who requested it.

As part of this overview, the FTC released a report this month that chastised corporate America for not posting online warnings when gathering information about people who visit Web sites.

In its review of more than 1,400 randomly selected Web sites--including 212 directed at children--the FTC found that at least 85% solicited some sort of personal data. Less than 2% of the sites disclosed how this information would be used.

As a result of its findings on children's privacy, the commission is recommending legislation that would force Web site operators to obtain parental consent before information is collected from kids ages 12 and younger.

Thompson, who was in Los Angeles last week to speak at a White House Internet Summit, shied away from talking about the Intel case. But in a conversation with The Times, he described some of the trade commission's plans and hurdles it must face.

Question: Was the commission surprised that the marketplace isn't regulating itself when it comes to privacy issues?

Answer: We were more disappointed than surprised. My first speech with the commission was talking about privacy. We've spent a lot of time working with industry groups. We've told them that we have a report that's coming out. We've told them that we want to see self-regulation that's real, meaningful and effective. And it hasn't happened.

We've set a very low bar of what is an acceptable warning. It's the lowest hurdle possible--and it's still often not being met. We're not talking about implementing anything more sophisticated than just saying, "You're here. But we're taking information from you, and we may be using it. Know this."

Q: If the online world doesn't start to comply, then what?

A: With regard to children, we need legislation recommendations that will deal with it and take action against those who refuse to comply. The FTC has already said that those who solicit personal identifying information from children may be engaged in an unfair trade practice. . . . We have not taken action in this area yet.

Q: Would you?

A: It would depend on the circumstances. I can't prejudge a case that might arise.

Q: What about the privacy of adults? When it comes to encouraging online commerce, shouldn't their privacy be considered just as important as a child's?

A: That is a huge area of concern. Despite our ongoing talks with the [online] industry, there's been very little progress. We expect to make further recommendations this summer. I can't say what those will be, or how they will be structured.

I do agree that making adult consumers feel comfortable with Internet commerce is important. If people feel discomfort, then the medium won't grow.

Q: Is a simple disclaimer that tells kids, "Go ask Mom if this is OK" an effective solution?

A: It's not perfect. Can kids lie? Sure. What we've found, though, is that kids are remarkably honest when they use the computer. At the very least, requiring parental permission before information is gathered and used may be enough of a screening process for a lot of kids.

Parents talk to their kids about what stores they can go to in the mall, and talk to them about what strangers they can talk to. The only thing we're saying here is that, before kids are asked for information about themselves and their families, parents should be consulted so they can make the decision.

We're not making value judgments about the content of what's on the Web. What we're saying is that the parents should be the ones who make those judgments.

There are some Web sites that do a good job of it now. If you look at Disney, at AOL, at IBM, they're doing things like this right now. It's not that hard. The companies that are the most savvy see the importance of security and privacy for their potential customers.

Q: What are the parameters of what you think is, and is not, personal data?

A: If it is possible to use that information to contact your kid offline, that's personal. If it can be posted on the Web and widely disseminated, that's personal.

There's a Web chat site I know about that invites children under 12 to submit pictures of themselves; their e-mail addresses; their home addresses; personal information about their hobbies, their likes and dislikes; and what school they go to. Anyone can get into this area and know everything about that kid. At the very least, if I were a parent, I would want to know if someone was asking my kid for this information.

I think some people would be very, very shocked at some of the information that is being solicited from children. There's one Web site I can recall that asks kids, I mean 8-year-old kids, "Where do you put your money? What kind of investments do you have? . . . What's your parents' income? What do they invest in--CDs or money markets? Who is their investment advisor?"

Q: Could a child who is 8 years old even understand those kinds of questions?

A: I think some of those children do actually understand. Or they'll go and look it up in their parents' files and give out that information. And their parents won't necessarily know about it.

Q: There are many people who say the government shouldn't be regulating the Net, that it's the parents' responsibility to monitor their child's computer activities.

A: The Internet is different from other forms of commerce. We're not talking about TV, where you can adjust programming times and advertisers can try to gauge the audience. We're not talking about a department store, where you only see a selection of what's available in the back room and the salespeople can get a sense of what you like.

The Internet is different. There are some companies that are using technology to get information from you without your permission. That is a different kind of dynamic than browsing though the mall.

I understand the concern that legislation hampers the online climate and prevents innovation. But unless people feel safe giving personal information online, commerce will not happen, regardless of the innovation.

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Staff writer P.J. Huffstutter can be reached via e-mail at p.j.huffstutter@latimes.com.

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