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The Privacy Debate

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© Copyright 2001
Jane Inouye, APR
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Last updated: April 30, 2001

Proposed Regulations

As more individuals surf online and are swept up in the tide of e-commerce, the issue of personal online privacy is upwelling as well. Just like traditional retailers, online retailers must work to gain consumer’s trust and confidence in their goods, product and services. Additionally, they must demonstrate an ability to provide secure connections, especially in the area of financial and personal data transactions.

According to an online study conducted by Forrestor Research in 2000, 22 percent of Internet users did not buy travel related products online due to privacy concerns. “It shows that the bar is getting raised regarding what online companies must do to make consumers confident on the Web,” said Henry Harteveldt, a senior analyst. “If companies can convince even one-tenth of those people to buy, that’s a lot of customers.”

The issue of regulating online personal data gathering while at the same time, promoting the use of the Internet as a profit-maker for U.S. based companies is at the core of the debate. And, from this debate has emerged two very opposed solutions for creating increased online consumer confidence – self-regulation or government regulation.


Since 1996, a number of online companies have been working to develop universal guidelines on the gathering of personal data. Much of the original drafting of these initiatives were developed by not for profit organizations such as TRUSTe, the Online Privacy Alliance and WCW who receive much of their funding from online businesses. Among many of the privacy initiatives were standardizing guidelines on disclosure, the release or exchange of personal information with third parties, and seal programs modeled after the Good Housekeeping seal of approval.

Yet, while many applaud these efforts, some have concluded that that self-regulation is not enough. “Self-regulation cannot address recalcitrant and bad actors, new entrants to the market, and drop-outs from the self-regulatory program,” said Robert Pitofsky, Chairman of the Federal Trade Commission in his address to Congress last fall. His remarks note a major shift in the FTC’s posture that until this time, was to let market driven initiatives control the collection of personal information.

Rogue web site operators and a lack of regulatory control has prompted privacy advocates to join the FTC in their efforts to implement legislative regulations. “If we don’t put in place a legislative framework very soon, we could quickly lose control of this problem,” said Marc Rotenberg, executive director for the Electronic Privacy Information Center.

Government regulation

Several bills that would require online companies to provide notice and consent before gathering personal information have been introduced in the current Congressional session. In the House of Representatives, at least four bills have been introduced and referred to the House Committee on Energy. Although the bills have yet to be heard, privacy experts and supporters have provided informational testimony before the Committee.

The debate continues

While Congress mulls its next step in the privacy debate, others continue to make their case. In calling for a continuance of self-regulation, Emory University School of Law professor Paul Rubin points out that many privacy fears are unfounded. “There does not appear to be actual evidence of harm to consumers from the legal use of information for marketing and advertising purposes,” said Rubin in an address to the House Committee on Energy.

Besides, says Rubin, if consumers don’t like a site’s data gathering practices, they can go elsewhere, “When businesses use information in ways that consumers do not like, they quickly learn about it, and the firms are forced to stop.”

Perhaps the best role government can play in the privacy arena is a source of education, say some experts. “Many privacy protections can only be used by individuals – no else can protect their privacy for them,” said Fred Cate, a professor of law at Indiana University. “Yet few individuals will recognize the importance of their responsibilities or have the knowledge to fulfill it without education.”