Internet businesses object to Senate bill to protect privacy of online consumers

Friday, April 26th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ A Senate effort to limit what businesses can do with information they collect online from their customers is under attack from Internet companies and getting little support from consumer advocates.

The proposed online privacy legislation, introduced last week by Senate Commerce Committee Chairman Ernest Hollings, D-S.C., would require businesses to tell visitors to their Web sites what information is being gathered on them and how it will be used.

Online businesses would then have to get consumers' permission before sharing with third parties sensitive information such as bank accounts, medical information, political or religious affiliation or Social Security numbers. Anyone who finds sensitive data was misused and can prove harm can sue for up to $5,000 for each use of the information.

The bill would allow less sensitive data, such as addresses, records of items purchased, user preferences and Web browsing histories, to be distributed unless the customer took the initiative to forbid it.

The Federal Trade Commission urged Congress to act two years ago. Several online privacy bills were introduced last year, but the issue faded after the Sept. 11 terrorist attacks renewed worries about the nation's overall security.

Hollings and other supporters said Thursday that federally mandated privacy protections would help Internet businesses, not hurt them, by making consumers less wary.

``Privacy is essential to the economic well-being of the future of the Internet,'' said Sen. Conrad Burns, R-Mont.

Consumer groups told a hearing before Hollings' committee that the legislation proposed a mostly balanced approach that would help curb privacy abuses on the Internet but could be improved.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, said an even better bill would require consumer consent before any kind of information could be distributed and would make it easier for people to sue.

Industry groups once opposed any kind of privacy law but now fear states will act first. They appeared ready to compromise on some type of national standards, and unanimously supported Hollings' proposal to enact federal standards that would override state laws.

But business representatives and some Republican senators on the panel insisted that any new law should apply to all companies, not just those operating on the Internet. Anything else would hamper their success against bricks-and-mortar competitors and add protections only for the 1 percent of all consumer transactions that are conducted online, said Paul Misener, an Amazon.com vice president.

Industry officials also argued that the marketplace is a better regulator, because only those companies that institute strict privacy protections can be successful with consumers.

Companies especially dislike a provision to give users the ability to review the information companies have about them, saying compliance would be too cumbersome and expensive.

Combined with the threat of lawsuits, Misener said, the bill would make privacy notices even more unreadable as companies put protecting themselves legally above informing consumers.

``We see no additional benefits to our customers, either future or current,'' Misener said.

Hollings warned that new protections will come and urged compromise.

``It's got to be managed, and it will be managed, either by the states or the federal government,'' Hollings said. ``We cannot let the perfect be the enemy of the good.''