Internet Privacy Watchdog Delayed http://www.washingtonpost.com/wp-srv/digest/wtech001.htm Robert O'Harrow Jr. Washington Post Staff Writer Development of an Internet privacy watchdog, to assess whether online companies use personal information properly, is behind schedule and may not be complete until the end of March. The delay is the latest wrinkle in the Clinton administration's efforts to promote industry self-regulation as an alternative to broad privacy legislation, which administration officials and others worry might impede growth of electronic commerce. White House officials have repeatedly said independent oversight of self-regulation is crucial. Last summer the administration dropped threats to push for legislation after industry leaders and the Council of Better Business Bureaus said it would create a system to assess privacy policies and review complaints by the end of the year. But now, as the council prepares to demonstrate its nascent program at a White House event Monday, officials acknowledged that it's not operational and that questions remain about how it will work and how many businesses will use it. "It just took more time than we originally thought," said Russell Bodoff, chief operating officer of BBBOnline, which will run the program. "I think there's a confidence level that we're on track . . . but there's no evidence I can give to you that American business in general is going to buy into this." Under the council's plan, an electronic seal would be used at World Wide Web sites operated by companies that meet a set of privacy guidelines. Companies would have to spell out how they gather information and use it, and give consumers a way to make sure the information is correct. They also would have to agree to work with the council to resolve consumer complaints or risk losing the right to use the seal. Pressure is building on industry leaders and the White House to follow through on pledges to prompt companies to issue privacy policies and then to stand by them. European officials have warned that U.S. companies – now subject to tough new privacy rules that took effect in 15 European Union member countries last month – could lose access to personal data in those countries unless an effective system is put in place. The Federal Trade Commission also is keeping a close watch. In July, Chairman Robert Pitofsky told Congress his agency would support online privacy legislation if industry fails to create a self-regulation system by the end of the year. David Medine, FTC director for financial practices, said in an interview the agency first wants to see how many online companies have posted privacy policies. Then it will turn its attention early next year to the council's enforcement program. Medine said the FTC is "making the big assumption they will be" ready. Privacy advocates also want evidence of progress. Deirdre Mulligan, staff counsel of the Center for Democracy and Technology, said she hopes a credible self-regulation scheme will fly. But she said the White House has to continue to press industry to come up with an enforcement program with teeth. Mulligan said of people pushing self-regulation, "they have a credibility problem." She added, "they have to make a deadline, and they have to stick to it." Evan Hendricks, a privacy advocate and publisher of Privacy Times, said he believes that the delay is another sign that self-regulation may not be workable. "How much more evidence do we need," he said. White House adviser Ira Magaziner played down the delay, saying he believes that the council will deliver an effective system. He said the group will demonstrate its progress at the White House event Monday. "Do I wish it were up and running? Yes, of course," said Magaziner, senior adviser to the president for policy development, who added that the program is six to eight weeks behind schedule. "It's not alarming . . . They're trying to do something different, something new." A nonprofit group called TRUSTe already provides an oversight service, including an electronic seal. But it was a fledgling operation at the beginning of the year, and White House officials and others wanted an organization with the reach of the Better Business Bureau and the experience of resolving consumer complaints. Meanwhile, TRUSTe has experienced huge growth this year and likely will play a significant role in providing privacy oversight. The number of companies licensed with TRUSTe has increased from 40 at the end of last year to about 450 now. That includes Yahoo Inc., America Online Inc. and Microsoft Corp. Bodoff of BBBOnline said scores of companies, including some of the largest in the nation, also seem enthusiastic about the council's initiative. More than 120 companies volunteered to participate in a field test of the group's privacy assessment, for example, even though only about 40 were needed. The outcome of that test will be released in a few weeks. The group also has received industry commitments for $2.3 million to launch the initiative. "We're trying to enhance the technology and ease of use for both business and consumers, which is why we won't be launching until the first quarter next year," Bodoff said. "You want it launched correctly." Among the questions that remain unanswered is how to draw in large companies that decline to join any seal program. Officials at McGraw-Hill Cos. have indicated they won't participate, in part because they already have a strong record for protecting customer privacy. "We don't see it as a one-size-fits-all solution," McGraw-Hill spokesman Neal Allen said. "We want our customers to come to us to resolve their problems. . . . We have a system that works well for us." -o- Subscribe: mail majordomoat_private with "subscribe isn". Today's ISN Sponsor: Repent Security Incorporated [www.repsec.com]
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