FTC seeks input on new privacy guidelines

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by MARIA TROMBLY

(IDG) -- The U.S. Federal Trade Commission this week issued a request for public comments about a proposed set of data privacy guidelines that would affect companies looking to share share credit records and other consumer information with affiliated businesses.

The proposed revisions to the Fair Credit Reporting Act (FCRA) include requirements such as making sure that individuals are notified about such data-sharing arrangements and are given the ability to opt out of having their personal information transferred from one company to another.

James Grady, an analyst at Giga Information Group Inc. in Cambridge, Mass., said the FTC is proposing the new privacy guidelines partly because of the growth of affiliate marketing programs that link e-commerce Web sites operated by different online retailers.

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"Privacy groups and activists have sounded the alarm, accusing a lot of these companies of forming affiliate relationships as a way of getting around privacy restrictions," Grady said.

The new guidelines clarify how the FCRA applies to companies that aren't traditional credit-reporting organizations, such as banks and credit card companies. FTC spokesman Howard Shapiro said the proposed revisions are primarily aimed at retailers -- although he wouldn't comment on whether the commission is specifically targeting e-commerce sites.

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The five members of the FTC voted unanimously to post the proposed guidelines in the Federal Register and to open a public comment period that's due to run through the end of next month. According to the proposal, online shoppers and other Internet users must be given the right to opt out whenever a company shares transactional data or other personal information with its affiliates.

The new rules also seek to specify how the opt-out option should be presented on Web sites. The FTC said opt-out notices or links to them must:

• Be labeled appropriately and be placed on Web pages that users frequently access, such as ones where transactions are completed.


• Include text or visual clues to encourage users to scroll down the page if that's necessary in order to view the entire notice.


• Be free of other elements, such as graphics or audio components, that could distract attention from the text of the notice itself.

The FTC said its guidelines are similar to proposed regulations issued by a group of federal banking agencies that includes the Federal Reserve System's board of governors, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. They also match the privacy provisions of the Gramm-Leach-Bliley Act that Congress approved last year to deregulate the financial services industry, the commission added.

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