Study: Web Sites Ease Consumer Profiling

Online privacy protection among the 100 most popular Web sites have grown steadily, but not significantly since the Federal Trade Commission last examined the issue in May 2000, a conservative think tank said.

Top sites such as weather.com and dogpile.com are now somewhat less likely to demand names, telephone numbers or other personal information from visitors and are more likely to let visitors stop them from passing that information on to other companies, the Progress and Freedom Foundation (PFF) found.

More sites take steps to make that personal information secure and nearly one in four have adopted a new technology known as P3P that conveys their information practices automatically, the think tank said.

But few sites allow consumers to control how their profiles are used within the company, the report found, and independent 'seal' programs that put their stamp of approval on sites that meet their standards have been slow to catch on.

The survey results show Internet businesses have responded to consumer concerns about online privacy, said PFF President Jeffrey Eisenach, one of three authors of the report. "We find evolutionary change here, not revolutionary change," Eisenach said. "But it's important to note that virtually all of that change is in a positive direction from the perspective of consumers.'"

Eisenach pointed out that three quarters of the top sites in 2000 let outside marketing firms like DoubleClick use a tracking device called a 'cookie' that records visitors' movements around the Web. But after the practice drew fire from consumers, fewer than half of the top sites now use third-party cookies, he said.

Richard Smith, an independent privacy expert, said the report showed different market forces at work. Web surfers enjoy a measure of privacy these days because many dot-com businesses that collected detailed consumer profiles with the hope of creating personalized services and targeted marketing lists have gone out of business.

"There was the idea that, 'The more we could snoop on consumers, the more money we could make.' I think that's clearly been proven not to be true," Smith said.

Echoing the methodology of the earlier FTC report, PFF hired accounting firm Ernst and Young to query the top 100 Web sites about their information practices as of December 2001.

Ernst and Young also conducted a random sample of all sites that record more than 39,000 visitors each month, producing results that closely mirrored those of the top 100 sites.

The report was applauded by the FTC's three Republican- appointed commissioners, who believe industry self-regulation, rather than federal laws, are the best way to encourage consumer privacy.

"We're not there yet, but we're going to get as close as we can get using the market system," said Commissioner Orson Swindle.

But Commissioner Mozelle Thompson, a Democratic appointee, said the report did not change his belief a law establishing basic protections would help businesses and consumers alike.

"Consumer confidence is really important. A baseline will eliminate the privacy issue as a source for uncertainty," Thompson said.

Unlike the earlier FTC report, PFF did not try to determine if consumers could access their profiles to ensure they are accurate, a key principle for laws that govern credit bureaus.

Eisenach said access provisions are difficult to determine and the need for consumers to check their online profiles for accuracy was less vital than it was for credit bureaus or other financial institutions.

But access could be easily measured by examining a Web site's privacy policy, said Jason Catlett, president of Junkbusters, and should have been included in the survey. '"o deny access is to say we have this information about you and we're not letting you see it. That's grossly unfair," Catlett said.

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