|March 26, 1999
Secretary Federal Trade Commission
International Consumer Protection
Financial Practices Division
Re: U.S. Perspectives on Consumer Protection in the Global
Electronic Marketplace--Comment P994312
Item 24: To what extent do/will industry-led self-regulatory
programs provide effective protection for consumers in the global electronic marketplace?
Dear Ms. Rosenthal and Mr. Smollen:
TRUSTe, an industry-led, third-party initiative, currently deals
with online privacy--only one element of consumer protection. To the extent that TRUSTe's
experience can serve as a model for other consumer protection efforts, these comments
outline the program's successes, strengths, and challenges.
TRUSTe has experienced significant success in the area of online
privacy self-regulation. TRUSTe was launched in direct response to the U.S. government's
call for private-sector initiatives to implement and oversee adherence to self-regulatory
guidelines, promote industry fair information practices, and provide for consumer dispute
How third-party initiatives can provide consumer protection:
- Education: provide education to Web sites about the
importance of protecting consumer protection; provide education to consumers about what
they can and should expect from a Web site in terms of services and protection.
- Consumer complaint mechanism: provide consumers with
an easy-to-use, responsive system allowing them to resolve problems with companies.
- Recourse/remedial measures: require companies to
submit to investigations and remedial measures to continuously improve their level of
service to consumers.
- Referral: refer serious violators to local law
enforcement agency or governmental agency such as Federal Trade Commission.
In addition to program related benefits, third-party initiatives can
play many other significant roles:
- Recommend changes or developments in policy based on real-world
experience and feedback from program participants and advisory working groups: In the case
of TRUSTe, this has been particularly effective with issues such as Children's Privacy,
Access, and Opt-out vs. Opt-in.
- Educate and promulgate standards developed by government (e.g. fair
information practices): TRUSTe has been able to disseminate standards through many
channels, including mailings, presentations, Web site, and educational advertising
campaigns. By educating business owners about these standards, a greater number implement
measures that in turn provide greater protection for consumers.
- Proactively improve business practices within companies: Third-party
programs have the ability to work closely, one-on-one with "clients" or program
participants. This role has had a direct impact on how major companies do business.
Companies that come into the program with little or no knowledge of consumer privacy
protection measures become sophisticated proponents of the need for best practices, in
turn benefiting consumers.
- Third-party programs have the flexibility and ability to move quickly
to introduce new measures and track industry's capabilities to adhere to higher standards.
If these measures are unrealistic or premature, third-party programs can report back to
government agencies with recommendations, suggestions and feedback--a sort of field test.
- Industry-led initiatives, more so than government programs, have the
ability to partner with large, prominent corporations (in TRUSTe's case, companies such as
America Online, Excite, Infoseek, Lycos, Microsoft, Netscape, Snap, Yahoo!, Compaq, Intel,
Lands End) to reach a greater number of constituents and consumers in new, creative ways.
Challenges to developing a Global Program
Since its launch in 1997, TRUSTe has been slated to grow into a
global privacy seal program. Now that the program has become well established in the U.S.,
TRUSTe has begun to make inroads into several other countries and regions.
We believe that a global privacy program is critical to the growth
of global e-commerce, and therefore, are committed to overcoming any challenges posed by
this expansion plan. To date, some of the issues raised in trying to develop a global
- Language: Clearly, a global program must be able to serve companies
and Web sites in their local language. This requires the ability to site offices and staff
locally. This is especially true for the TRUSTe program, which relies on ongoing
monitoring and oversight (i.e. a one-time translation would not be sufficient for our
level of monitoring).
- Cultural Differences: Each country or region has its own cultural
expectations of what an individual should be able to expect from a company. However, it
would be meaningless to develop separate program for each country or region. The challenge
is to develop a core program that can accommodate such cultural diversity. Our foray into
Europe will provide a model upon which we will base other expansion efforts.
- Legal Differences: While the core program will not change, it may be
necessary to have differing escalation processes due to the fact that each country may
wish to become involved in the legal process at different stages in the escalation.
These comments are respectfully submitted by TRUSTe in an attempt to
forward discussion about the importance of self-regulation to a global e-marketplace.
Very truly yours,
Product Operations Manager