Revolution in Internet Commerce Is "Profoundly Pro-Consumer" Pitofsky Says

Federal Trade Commission Chairman Robert Pitofsky said today that the revolution in Internet commerce "surpasses anything we have seen since the communications and transportation developments at the end of the 19th century. The challenge to the private and public sector is to encourage that revolution, but contain the excesses that revolutions often produce," he said.

In his speech, "Electronic Commerce and Beyond: Challenges of the New Digital Age," at a Woodrow Wilson Center meeting sponsored by the Division of International Studies, Pitofsky said, "We see electronic commerce as a profoundly pro-consumer development. It offers consumers a range and variety of products, and a source of relevant information... that exceeds anything we have seen before." But he cautioned that there are downside issues for the Internet economy, as well.

"The Internet has become a fertile field for fraud. It allows fraud promoters to mimic legitimate business more convincingly, reach potential victims efficiently, elude detection by maintaining anonymity, and frustrate enforcement officials by locating (or relocating when detected) in remote jurisdictions that have no relevant law or no serious enforcement," Pitofsky said.

"The technology of the Internet -- its ability to marshal and sort vast amounts of information, sometimes without the online consumer even knowing information is being collected -- is a new and potent threat to traditional privacy values," he said.

"Because electronic commerce respects no borders, cooperation and coordination in international law enforcement . . . becomes increasingly essential to protect consumers . . ." and;

"The electronic commerce revolution, for all its promise, may widen the divide between the haves and have nots, between nations and even within nation states.

Pitofsky said that laws and regulations currently in place have proven adequate to handle fraud on the Internet so far, and pointed to more than 100 Internet-related law enforcement actions brought by the FTC. But he said that issues raised by Internet concerns -- such as concerns about consumer privacy -- are reopening similar questions for the brick and mortar marketplace. "While much of the attention to issues of privacy has related to the online universe, concerns about the merging of online and offline databases suggest that considerations of purely offline acquisition and use of personally identifiable information are likely to receive greater attention. It is at least worth considering why the same arguments that lend such force to efforts to protect online privacy do not apply with roughly equal weight to information gathering in the offline world," Pitofsky said.

Pitofsky noted that the recently-adopted Organization for Economic Cooperation and Development Guidelines enumerating "best practices" for online commerce represent the kinds of initiatives that will instill consumer confidence in e-commerce. But he cautioned that issues of legal jurisdiction over Internet commerce posed a formidable challenge.

"We are at the forefront of an international revolution and can take part in shaping it," Pitofsky said. "I look forward to working with you in ensuring e-commerce is left alone to flourish but not neglected so that consumers and businesses are too uncertain or even afraid to venture into it."

Copies of the speech are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll free at 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.