Web Regulation Under Bush

  |  April 24, 2001   |  Comments

The weapon of choice for Bush-era Web regulation is the Federal Trade Commission. But if we think consumer advocates are happy-happy, Dana says it's time to look at the fine print.

The weapon of choice for Bush-era Web regulation is the Federal Trade Commission (FTC), and its press office was very busy last week.

For instance, if you've gotten spam from outfits claiming they can "find out anything about anyone" (and who hasn't), the service is illegal. It violates a privacy law called the Gramm-Leach-Bliley Act (after its sponsors) that prohibits using false statements to collect sensitive data.

Under "Operation Detect Pretext," the FTC turned up 200 different companies offering to sell things like your bank balance to anyone with a few hundred dollars and sued three of them. I checked my own spam folder and found that at least in the last two weeks, the traffic of such offers to my inbox has stopped.

But a brief online investigation found all three companies cited in the FTC press release -- Information Search Inc. of Baltimore, MD; Discreet Data Systems of Humble, TX; and Smart Data Systems of New York -- are still operating. Discreet does have a note on its home page claiming it's in compliance with the law, but, at the top of the same page, it claims it can "locate bank information," the service that got it in trouble.

The FTC also sent out a press release concerning enforcement of the Children's Online Privacy Protection Act (COPPA). Three Web sites were fined a total of $100,000 for collecting personal information on kids under 13 without parental consent. (The release has links to details on all three cases.)

Two of the sites cited were small businesses. Girl's Life is owned by Monarch Services in Baltimore. BigMailBox.com is owned by an outfit of the same name in Los Angeles.

The third site cited, InsideTheWeb.com, is run by LookSmart, according to the WHO IS database run by Register.com, but that service was shut down in March, according to the page as cached by Google. According to the cached page, LookSmart blamed the advertising slump, not the FTC, for the closing. Instead, the InsideTheWeb URL now points to LookSmart's Beseen service, which runs private-label threaded discussion lists.

If you're worried about COPPA, however, you should know that by complying with the rules of the Entertainment Software Rating Board or Council of Better Business Bureaus, you win "safe harbor" from the FTC's scrutiny. Those private groups will enforce the act through their rules and procedures.

If you think consumer advocates are happy-happy, look at the fine print. The Center for Media Education (CME), which supports COPPA, recently conducted a survey of 153 kids' sites and found 86 percent still collect personal data.

While more sites are limiting the information they require from kids for using their sites, CME wrote, most privacy policies aren't displayed clearly and prominently. The CME also charged that most sites that should require parental consent before collecting data aren't doing so properly, and some sites that are complying are also encouraging kids to lie about their age.

What have we learned from all of this? The media reaction from the FTC's moves is uniformly positive, but that reaction remains skin-deep. The real impact on business from all of this is minimal.

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ABOUT THE AUTHOR

Dana Blankenhorn

Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.

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