COMMENTS OF CONSUMER ALERT CONCERNING CONSUMER ON-LINE PRIVACY-P954807
Consumer Privacy 1997
Consumer Alert hereby files comments on the Federal Trade Commission's public hearing on "Consumer Privacy Issues Posed by the Online Marketplace," and a request to participate in sessions two and three of the Commission's "Public Workshop on Consumer Information Privacy."
Consumer Alert appreciates the opportunity to comment on privacy issues relating to the Internet. A national, non-profit, non-partisan, consumer group founded in 1977, Consumer Alert promotes the value of consumer choice and competition in advancing consumers' interests in the marketplace. Our comments on privacy are based on these principles.
Before addressing the FTC's specific questions, Consumer Alert would like to address the term "privacy" as it relates to the Internet.
What does Privacy on the Internet Mean?
People who desire "privacy" may seek any or all of these goals. And their privacy "ideals" may change from situation to situation. A person may desire privacy in the sense of limiting information about herself, but not when those barriers cause her to be "excluded." For instance, an individual may wish to keep "private" (that is, "secret") credit data about herself, but she may not wish privacy in the sense of being "excluded" from offers for a no annual fee, low interest rate credit card. Similarly, an Internet user who enjoys gardening may want to keep information about herself "private," but may not want to shut herself off from an offer for "How to Control Aphids on Roses" that would come through her e-mail.
The concept of privacy seems to be undergoing a transformation that, while it may appear to be beneficial to consumers, will likely operate against consumers' interests as noted in a private communication from Tom G. Palmer (Director of Special Projects, Cato Institute). Palmer observed that the right to shut the door to one's house and thereby protect one's interest in privacy, is being transformed to a right to control information itself. But since information is in the minds and behavior of others, such a right to the information itself is a right to control other people. Privacy proponents advocate a right by some to stop others from engaging in peaceful commerce, the purely voluntary making of offers and acceptances.
Proponents of "privacy" on the Internet argue that users should be assured "anonymity" when online. However, they have failed to make any comparisons between the Internet and other public communication media or transactions that do not assure anonymity.
Almost all forms of interaction involving a transaction or simple communication (i.e., talking, using a credit card, being passed over by a random television camera) involve some marginal loss of anonymity. Because nearly everything a person does reveals some information to a stranger, it does not follow that being online grants the user any special privacy rights.
Consumer Alert contends that attempts to mandate privacy as a right to control others undermines freedom and the rule of law. It reflects an extreme approach and, if used to develop standards of privacy on the Internet, would unnecessarily restrict the free flow of information and the consumer benefits that result from that flow.
FTC Question 2.3: What are the risks, costs, and benefits of collection, compilation, sale and use of personal consumer information in this context?
Consumer Benefits of the Free Flow of Information
on the Internet
Many groups, including non-profit groups, collect information about users who access their materials. Commercial and non-profit organizations may collect user information for a variety of reasons: to discover more about users so they will be able to tailor and improve their offerings; to survey for research or polling purposes consumer preferences, attitudes, or habits; to offer products or services to those most likely to be interested in them; and so on.
Information collected and maintained by organizations whose purpose is to gain profits by providing valuable services and products to willing consumers poses no danger to privacy. The point of such information is not to violate rights, but to provide goods and services more effectively, at lower cost, and to those who desire them.
The "risks" and "costs" of
Legitimate companies collect and compile information about existing and potential customers for various purposes such as improving the quality of their products or services; distinguishing consumers who are interested in particular services; and making offers to people who are most likely to accept those offers. Thus, consumers receive real benefits from the collection of information: By allowing advertisers to tailor their ads to particular audiences, it results in service and product improvement/innovation and possibly offers.
People who don't want to receive offers from advertisers can protect themselves by the "opt out" option; they can decide to reveal information only on the condition that it would be shared with others. This allows those who seek to secure complete privacy or anonymity to do so by exercising individual choice, while incurring minimal transaction costs overall, in contrast to restricting the rights of others. Proposals to mandate a reversal of this principle: to require that individuals actively "opt in" by means of some legal instrument before any information about them can be shared, would create enormous barriers to the free flow of beneficial information.
Adults accessing Web sites can make decisions for themselves about whether they want to access sites without disclosures. They can also make individual decisions about whether to disclose the information requested through surveys, questionnaires, etc. Internet users who want be anonymous in their visits to web sites, can take advantage of readily available tools to do so. Additionally, users of the Internet are not homogenous. People on the Internet include diverse individuals with many different preferences, including preferences regarding privacy. Proposals to regulate an extreme view of privacy--that all users of the Internet need protection--reflects a "one size fits all" standardization that would run roughshod over consumers' own preferences and values. The refrain "people don't know what they're giving up" in terms of privacy on the Internet is often heard. Consumer Alert would offer that people really don't know what they would be giving up if restrictions on information flow were mandated.
Consumer Alert urges policymakers to consider the importance of the information industries in extending benefits to consumers and how consumers may suffer individually if useful and benign information is bottled up by ill-conceived regulations.
FTC Question 3.19: Are there technological developments that might serve the interests of parents who prefer that their children not receive unsolicited e-mail?
Children and the Internet
And they have the tools to do so. There exists a vast array of technology available (e.g., Net Nanny, SurfWatch, CYBERsitter) to parents, schools and libraries to screen material on the Internet and to block objectionable or unwanted material. This was evidenced during the FTC's "Public Workshop on Consumer Privacy on the Global Information Infrastructure" (June 4-5, 1996). Some critics argue that many parents aren't as competent as their children in using computers. However, it does not follow that government as "nanny" should be looked to as the solution.
This very point of parental responsibility with regard to children and the free flow of information on the Internet, was addressed by the U.S. District Court for the Eastern District of Pennsylvania (June 11, 1996) in addressing the constitutionality of the Communications Decency Act of 1996. On the issue of undesirable material in relation to children, Judge Dalzell, in his opinion, stated his point forcefully:
Technology to assist parents has adapted quickly and is increasingly available. These new technological approaches allow Internet users to choose their own levels of privacy without imposing restrictions on others.
Responsible advertisers, those that plan on being around over the long term, have a real interest in meeting consumers' wants and needs, including those relating to privacy. They know that ignoring consumer preferences is not the way to gain customers and earn profits. Thus, advertisers are extremely sensitive to real consumer concerns about privacy and about information use, especially relating to children. These companies, not the "bad apples," are the ones that will survive and thrive.
A free market fosters innovative solutions to consumer concerns and can meet consumers' demands efficiently and with the least cost. Thus, the market can respond with new technological solutions to consumers' concerns about the Internet much more rapidly than can statutory regulations.
The technological and institutional changes that are occurring as the Internet becomes more widely used are certainly substantial. Consumer Alert views these changes not as threatening but as providing new opportunities to advance consumer interests, specifically those consumers least well served in today's world. This confidence is based on the fact that the Internet will reduce the cost of information and thus will make it possible to serve an ever greater proportion of the consumer population.
Restricting the evolution of this communication phenomenon will be a disservice to consumers.
Frances B. Smith