FTC: Consumer Privacy Comments Concerning The Interactive Services Association (ISA)--P954807

TESTIMONY OF THE
INTERACTIVE SERVICES ASSOCIATION BEFORE THE
FEDERAL TRADE COMMISSION'S PUBLIC WORKSHOP ON
PRIVACY

PANEL II: SELF REGULATORY APPROACHES TO ONLINE PRIVACY ISSUES

JUNE 11, 1997

JEFF B. RICHARDS
INTERACTIVE SERVICES ASSOCIATION
EXECUTIVE DIRECTOR

The Interactive Services Association (ISA) appreciates the opportunity to appear before the Federal Trade Commission today. The ISA's member companies have been at the forefront of many of the interactive industry's new developments and we look forward to working with the FTC on this crucial and developing part of our industry.

The ISA is the leading trade association representing more than 300 companies devoted exclusively to promoting and developing consumer online, Internet and interactive services worldwide. Among its members, the ISA count key providers of consumer Internet and online services, such as America Online, AT&T, Bell Atlantic, CompuServe, IBM, Microsoft, Netscape, NETCOM, and Prodigy. These are firms, along with a host of interactive marketers and online content providers, who worked last year and over the last several months to design and revise the ISA Privacy Principles.

1996 to Today

Last year, the ISA worked in coordination with the Direct Marketing Association to design a series of guidelines that fit the need of many of our mutually-shared members and that addressed concerns and set principles for notice and opt-out for online marketers, and marketing to children online. This year, the ISA and the DMA pursued individual approaches that specifically suited the needs of their individual memberships. This by no means diminishes the quality of the work that was completed last year; to the contrary, the work of the ISA and the DMA was the foundation of the ISA's recently completed guidelines. It is obvious that privacy is and will continue to be one of the more conspicuous concerns of both the consumer and business communities in online and Internet services. The ISA continues to work with the DMA and a variety of other to meet the concerns of consumers while seeking to balance the needs of ethical online business operators.

1997 ISA Principles

Thus, the ISA has worked over the last year with its member companies to construct a series of more comprehensive principles that adequately reflect not only technological trends, but also the changing desires of the consumers affected by these trends. The following is a brief synopsis of our submitted testimony on the ISA Privacy Principles for 1997:

• The ISA developed Principles on Notice and Choice Procedures for Online Information Collection and Distribution by Online Operators, which seek to address the nature of -- and manner in which -- "personally identifiable" information is collected by online operators. The principles further encourage the online operators to divulge the purposes of the aforementioned information collection and state that Online operators should provide consumers with the means of exercising choice, to have personal information not rented, sold, or exchanged.
• The ISA's second set of principles deals with the unique relationship that online and Internet providers maintain with their customers. These principles explore the need for online providers to accurately and responsibly use the information collected and to provide adequate opportunity for each customer to correct any personal information. These principles set out a roadmap for online service providers to follow, while the consumer's perspective of the online experience is the focal point of the principles laid out by the ISA.
• The third ISA principle deals directly with the issue of marketing to children online and on the Internet and since the ISA will be participating directly in Friday's FTC panel on children's issues, I will keep my comments limited. The ISA firmly believes that all online operators marketing to children should be familiar with the 1997 advertising guidelines of the Children's Advertising Review Unit of the Council of Better Business Bureaus. Secondly, the ISA strongly recommends today that consumer empowerment -- through education and through the use of technology tools -- is the best way to foster the potential of the online experience.
• Lastly, the ISA developed principles for unsolicited marketing e-mail. As we all know, unsolicited e-mail or "spamming" is one of the more contentious issues on the net and in both state and federal legislative bodies. The ISA's member companies, including CompuServe, Prodigy and America Online, have been at the forefront of protecting their customers from unwanted solicitations. The ISA guidelines plainly spell out four key components for both the consumer and the online marketer to address the growing nuisance of unwanted online solicitation. The ISA has formed a working group to examine the unsolicited e-mail issue and is working closely with policymakers to craft a solution to this situation.

Let me be clear: I do not believe that any single organization has every needed answer. Thus, ISA is working closely with the National Consumers League, the Center for Democracy and Technology, the Internet Privacy Working Group, the Information Technology Association of America, and Privacy and American Business, to name just a few.

At the same time, ISA members and much of the larger interactive industry saw that consumers had a variety of expectations about their own privacy. The ISA has long recognized that consumer trust and awareness is a critical foundation to the goal of achieving widespread and central use of interactive services in society. Lack of adequate regard for consumer privacy could set the stage for a negative perception of the industry or individual providers, quashing usage. Thus, privacy approaches may be a competitive advantage as competition intensifies and consumers grow more educated.

The full text of the new ISA principles have been submitted to the Commission, and are being disseminated via the ISA's web site and through other means.

The thrust of ISA's work is this: consumers must be informed about the practices of the providers with which they do business, and then have an opportunity to act on that information. This is the next challenge of consumer education and empowerment: to use the very tools of interactivity to the benefit of consumers, and thus to strengthen the understanding of and bond between providers and customers.

In sum, privacy for the online consumer -- and weaving it seamlessly into the technological developments of tomorrow -- is one of the more vexing and necessary aspects of the interactive industry. The ISA principles are a blueprint for the online and Internet providers of today to set the practices of tomorrow. The ISA will continue to monitor and evolve with the changing privacy concerns of the industry and its consumers, and we are accelerating our public education work hand-in-hand with ISA members.

The ISA appreciates the FTC's willingness and forward looking approach to dealing with privacy. This very crucial component of the online and Internet services environment is all of our concern and we are grateful for this chance to present our views.