In a policy reversal critics say could potentially cripple E-commerce, the Federal Trade Commission has called on Congress to pass legislation protecting consumer privacy in cyberspace. And two senators have responded with specific proposals.
Until recently, the FTC has been content to let the Internet economy regulate itself, but that changed in May after the agency released a report based on a survey of the most-popular sites visited on the World Wide Web. "While there will continue to be a major role for industry self-regulation in the future, the Commission recommends that Congress enact legislation that, in conjunction with continuing self-regulatory programs, will ensure adequate protection of consumer privacy online," the report states.
Although the FTC argued that consumer concerns over privacy on the Internet are hurting sales there, a contrary conclusion was reached by one of the agency's commissioners. "Government regulation of online privacy obviously will impose substantial costs on online sellers that might very well reduce their online sales or induce firms to offer fewer products for sale or go out of business entirely," dissented FTC commissioner Orson Swindle.
Critics' objections aside, senators Fritz Hollings (DS.C.) and Jay Rockefeller (DW.Va.) have filed legislation in response to the FTC's urging. Provisions include requiring companies operating on the Internet to indicate how they collect personally identifiable information and how they intend to use it. Companies would also have to obtain consent from consumers before collecting personally identifiable information from them.