- The Washington Times - Friday, July 28, 2000

The government Thursday approved a plan by Internet advertisers to regulate the secret gathering of information used to profile Web customers.

The Federal Trade Commission voted 4-1 to endorse the self-regulatory plan submitted by the Network Advertising Initiative, a consortium of major Internet advertising companies.

The plan, which will take effect immediately, will require Web advertising companies to notify consumers of their Internet profiling activities and give customers the chance to choose whether information about their Web habits and interests can be gathered anonymously.

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

The FTC urged the rest of the Internet industry to follow suit.

"Industry self-regulation must play a central part in protecting consumer on-line privacy," said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection.

A privacy expert immediately criticized the deal, saying it does not give the government any remedy if companies fail to follow the guidelines.

"This is a report written by industry for industry and does not respond to the public concerns about privacy," said Marc Rotenberg, president of the Electronic Privacy Information Center, which filed the original complaint with the FTC about on-line profiling.

Mr. Rotenberg 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.

The FTC is still pressing for legislation to ensure that Web advertisers outside the group, which covers about 90 percent of the industry, follows the principles.

Network Advertising Initiative members that will follow the principles include Internet advertising giants 24/7 Media, AdForce, AdKnowledge, DoubleClick, MatchLogic, Engage Technologies, NetGravity and Real Media, officials said.

The agreement is designed to address consumer concerns about the growing use by advertisers and Internet sites of ad-banner technology that secretly collects information about users as they visit Web pages.

The technology allows such companies to develop profiles of Web customers based on which pages they clicked on, what data they entered into Web forms and which ads they viewed.

Privacy advocates fear the information could easily be transmitted to third parties without people's consent or misused.

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.

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.

And it further put the Internet on notice earlier this month by taking the owners of the defunct Toysmart.com Web site to court and forcing them to abide by their privacy policy if they sell their customer list to a third party.

"Customer data collected under a privacy agreement should not be auctioned off to the highest bidder," the agency said in settling the matter.

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