CONGRESS TO TAKE UP THE ONLINE PRIVACY ISSUE

As reported by John Moore, two members of the House's Internet caucus are calling for online-privacy legislation to supplement the industry's self-regulation efforts, an initiative that could have far-reaching effects on the data-mining efforts of ASPs.

The proposal has bipartisan support from the co-chairs of the Congressional Internet caucus, Rep. Rick Boucher (D-Va.) and Rep. Bob Goodlatte (R-Va.).

"The time has come for ... Congress to extend online-privacy protection with respect to the collection of information by Web sites," Boucher says. He favors legislation that would provide "minimum guarantees" that all Web sites would be bound to observe. Such legislation, according to Boucher, would do the following:

• Require Web sites to post a notice describing the personal information collected and how it will be used. The notice also would disclose whether the information would be used strictly by the Web site or transferred to third parties.
• Require Web sites to provide an opportunity for visitors to opt out if they don't subscribe to a site's privacy policy.
• Require Web sites to establish a procedure to ensure privacy compliance. Congress would leave it to the FTC to flesh out the specific regulations.
• Preempt state legislation in the privacy arena. Boucher says that would advance a clear set of requirements and prevent a "patchwork" of state laws.
• Commission a government study on future steps Congress should take to enhance privacy protection.

Goodlatte, meanwhile, emphasizes that "targeted" federal action would operate alongside industry's privacy initiatives, noting that Congress should not take "a heavy-handed approach" to online privacy.

Nevertheless, many current and would-be ASPs say that one of the primary long-term goals of their hosting operations is gathering information that can be sold to interested corporations and market-research firms. Restrictive privacy laws could put a damper on that opportunity.

Goodlatte says Congress is unlikely to enact such legislation this year, however. He and other Hill observers believe Congress will take up the online-privacy issue in 2001.

While a national law has yet to appear, consumers already are seeking a privacy commitment from the companies with which they do business, according to a survey of 800 online users by Privacy Council Inc and Privista Inc. Of the survey's respondents, 83 percent say it is extremely/very important for businesses to have an understandable privacy policy free of fine print and jargon.

Eric Gertler, CEO of Privista, says industry faces more than a privacy problem. "I would argue that the industry has a much broader consumer-confidence problem," he says. He adds that online businesses face a "consumer backlash" due to the perception that personal data is being misused.