FRAUD FIGHTERS COLLIDE WITH PRIVACY ISSUES
by Tom Woodruff

The government's ongoing battles against fraud on the Internet butted heads last week with privacy concerns. It's a battle that's likely to intensify in coming years, as efforts to protect us from unscrupulous fakes also may compromise our anonymity, privacy advocates say.

The latest example occurred when news leaked out about a Securities and Exchange Commission (SEC) plan to automate their monitoring of Internet chat rooms and message boards. Under the plan, surveillance software would mine public sites looking for fraudulent stock promotions and other "get-richquick" schemes, and develop large databases of these postings. Internet sites are already under surveillance by private firms competing for the SEC's contract to provide the software for this automated snooping. Critics say this effort violates our privacy and may even be unconstitutional, raising fundamental questions about the nature of "speech" on the Internet.

SEC spying already under way -- After The Wall Street Journal and the Associated Press published news about the new initiative, the SEC offered this defense: the new effort would merely automate surveillance techniques that SEC agents already regularly conduct. John Stark, director of the SEC's Office of Internet Enforcement, says that the automated snooping would free agents to do the more difficult work of investigation and interpretation of all the data they are collecting. "All we're trying to do with the Internet is clean it up," Stark says.

After considering a bid for the SEC business, one firm, PricewaterhouseCoopers, decided not to participate because of privacy and constitutional concerns. Larry Ponemon, the partner in charge of Internet privacy issues, says the SEC project "is equivalent to, in my opinion, wiretapping ... the equivalent of planting a bug." Ponemon also says that the project might violate the Constitution's protections against unreasonable search and seizure.

Marc Rotenberg, of the privacy policy group Electronic Privacy Information Center, says a broader issue is involved: "There's a critical issue here of what constitutes a search ... we need to think about what constitutes a search in the digital age."

As an example, if online speech is like a public gathering, government agents would be free to "take notes" at the public gathering. If, however, forums like chat rooms and message boards are more like party-line telephone calls, the laws that cover searches and telephone wiretapping would apply.

One congressman who considers Internet discussions analogous to telephone calls is Rep. Robert Barr, Jr., R-Ga. "No government agency should be able to just go in with a vacuum and scoop up information just because there might be something in there that they might consider against the law."

Even though SEC officials have promised that all information not pertinent to an ongoing investigation will be discarded, Barr isn't satisfied: "The history of watching this sort of stuff does not lend itself to a great deal of trust. It's just too easy to abuse."

Companies who have bid for the SEC program are already conducting trial runs of their automated mining software programs. The programs are supposed to look for content that improperly uses the SEC's name, fictitious press releases or news reports, and disclosure of nonpublic information. Even though SEC agents would have the ultimate authority over interpretation, the successful bidder will have a program that analyzes the gathered data, including comparisons to legitimate news and financial data.

The information that's currently being gathered and documented by contractors is pretty extensive: "the date of posting; title line; the groups to which posted; nature of discussions; and the disclosed affiliation, user name and e-mail addresses of individuals posting information."

In spite of the extent of information being gathered on Internet posters, the SEC's Stark says, "the SEC really has a long history of being very careful when it comes to people's rights.... But we're not going to tolerate people trying to lie, cheat and steal. We're going to continue a policy of zero tolerance."

In spite of these assurances, expect ongoing battles in Washington over this issue. Barr already has asked the House's Judiciary Subcommittee on the Constitution to put this issue on its agenda.