Those who worry about their privacy while online have had their worst fears confirmed with the release of a US Federal Trade Commission (FTC) report that found most commercial Internet sites have failed to adopt practices that inform visitors how personal information about them will be used.
Until these privacy issues are addressed, Internet commerce will not reach its full potential as a mass market business, FTC Chairman Robert Pitofsky said in a written statement accompanying the report.
"The Commission's survey of over 1,400 Web sites reveals that industry's efforts to encourage voluntary adoption of the most basic fair information practice principle -- notice -- have fallen far short of what is needed to protect consumers," said the report.
The FTC is recommending now that the US Congress develop legislation requiring parental notification and consent when World Wide Web sites collect personal information from children. Additional recommendations regarding privacy policies at sites not aimed at children will be released in the next few months.
Some 85 percent of the commercial sites reviewed collect personal information, but only 14 percent notify consumers of the site's personal information practices. Just 2 percent provide consumers with a comprehensive privacy policy.
The findings likely will be particularly chilling for parents concerned about the privacy and safety of children online. Of the 212 children's sites surveyed, 89 percent were found to collect personal information about youngsters, with 54 percent providing details of information collection practices.
"Few sites take any steps to provide for meaningful parental involvement in the process," the report said. "Only 23 percent of sites even tell children to seek parental permission before providing personal information."
The FTC has been reviewing online privacy issues for three years and the report is part of an ongoing attempt to assess the U.S. policy of allowing the Internet industry to self-regulate. The report looked at four information practice principles -- notice, choice, access and security.
"The Commission's survey of Web sites tells us that industry efforts to encourage voluntary adoption of these principles have not met with great success," Pitofsky said in a written statement.
"More incentives are necessary to encourage self regulation and to ensure consumers that their personal information will be protected online," he said. "In fact, the online marketplace is unlikely to reach its full potential until consumers are confident that adequate protections are in place to protect their personal information."
The report, submitted to Congress, found that development of e-commerce is at "a critical juncture" and that growth will be stymied if commercial Internet sites fail to self regulate. The administration of U.S. President Bill Clinton has taken a hands-off approach to Internet regulation. Today's report, however, already has touched off debate about that policy.
In an attempt to stave off a push for legislation, 12 high-technology trade associations have banded together to announce a self-regulation plan regarding privacy issues. The group has worked on its proposal for four months and yesterday sent a letter to Clinton outlining the plan, which calls for adoption of a unified set of privacy protection standards and an action plan for broader adoption of privacy policies by Internet sites.
Copies of the FTC report, a consumer publication regarding online safety and privacy and the FTC's "About Privacy" Web page can be accessed from the Commission's Internet site at http://www.ftc.gov/. The FTC is based in Washington, D.C.