FTC Seeks New Powers to Ensure Web Privacy

The head of the Federal Trade Commission said Wednesday commercial Web sites merited a C+ grade for protecting customers’ online privacy.

Renewing a call for more power to police the Web, FTC Chairman Robert Pitofsky allowed the private sector an A- for what he called recently improved efforts at self-regulation.

But he said the performance overall was no better than a C+ and urged Congress to give his agency new powers to ensure compliance with four “fair information practices”: notice, choice, access and security.

“Self-regulation is essential, but it will be most effective if it’s backed by the rule of law,” he told the House Subcommittee on Telecommunications, Trade and Consumer Protection.

FTC-proposed legislation would require Web sites to provide clear notice of their information practices and offer consumers choices on how their personal information is used beyond that for which it was provided.

The FTC also favors offering consumers access to the data a Web site has collected about them, including an opportunity to correct mistakes or delete data. Finally, it would mandate steps to protect the security of data gathered online.

House Majority Leader Dick Armey (R-Texas) made clear that he would oppose new regulatory powers, at least until the resolution of questions about how some U.S. government Web sites treat information they collect from visitors.

“So long as the private sector continues to do a much better job than the government--and continues to improve its own practices--we should restrain the instinct to interfere with the Internet,” he said in remarks prepared for the panel.

But panel Chairman W.J. “Billy” Tauzin, a Louisiana Republican who also is critical of government Web site practices, said, “I think we’ve all come to the conclusion that next year we’re going to have to legislate in some of these areas.”

AltaVista, a leading Internet search company majority-owned by CMGI Inc. , became the latest industry leader Wednesday to voice support for privacy-enhancing laws, joining America Online Inc., the world’s biggest online services company, and Walt Disney Internet Group, among others.

“In our view, privacy is becoming the issue” dominating debate about the future of the Internet, Mark Delfino, AltaVista’s chief privacy officer, told a conference on digital privacy and globalization at Johns Hopkins University’s School of Advanced International Studies.

For electronic commerce to flourish, he said, businesses and consumers must perceive the Internet to be a secure environment capable of protecting their privacy.

At issue could be a total of $1 trillion in lost e-commerce revenues worldwide over the next three years, Delfino added, citing studies by Internet commerce analysts International Data Corp. and Jupiter Research.