FTC: Consumer Privacy Comments Concerning America Online--P954807

FTC: Consumer Privacy Comments Concerning America Online--P954807

In the Matter of

CONSUMER PRIVACY 1997 -- SUPPLEMENTARY COMMENTS SUBMITTED BY AMERICA ONLINE, INC.

William W. Burrington
Director, Law and Public Policy
Assistant General Counsel
202/530-7880
BillBurr@aol.com
and
Jill A. Lesser
Deputy Director, Law and Public Policy
Senior Counsel
202/530-7882
JillLess@aol.com

America Online, Inc.
Suite 400
1101 Connecticut Avenue, NW
Washington, DC 20036-4303
202/530-7879 Fax

Dated: July 14, 1997

The following are supplementary comments of America Online, Inc. to be placed in the record of the Bureau of Consumer Protection's 1997 Public Workshop on Consumer Privacy. These comments are intended to supplement the written comments filed by America Online on April 15, 1997 and the oral statements made by Jill Lesser and William Burrington on June 12 and 13, 1997 during the public hearing. These comments are divided into three sections 1) America Online's information collection and use policies; 2) further statements on Unsolicited Commercial E-mail; and 3) America Online's information collection and use policies as they relate to children ages six through twelve.

America Online's Information Collection and Use Policies

As stated in its April 15, 1997 filing, AOL believes that it is critical for companies operating in the online world to address consumer privacy concerns as a prerequisite to meeting consumers' interests and growing interactive networks into a global and economically and socially-beneficial mass medium. To that end, AOL has implemented and published its Privacy Policy as part of its Terms of Service and continually updates that Policy so as to ensure AOL's members are fully apprised, in terms they can easily understand, of the parameters of the Policy. The latest update of the Privacy Policy will go into effect on July 31, 1997 and begins as follows:

Because protecting your privacy is very important to AOL, Inc., we have established a privacy policy that safeguards your personal information, and are committed to protecting its confidentiality. We will limit the collection and use of personal information, or Individual Information (as defined below), to what is necessary to administer our business, provide you with the highest quality service, and offer you opportunities we think will be of interest. We will NOT disclose any Individual Information except in the limited circumstances specifically described below. AOL does disclose Individual Information in an aggregated form that does not identify individual Members in order to describe its services to prospective partners, advertisers and other third parties. We actively participate in industry associations and community groups to support strong and effective privacy guidelines and practices in the interactive environment.⁽¹⁾

The most recent update of the Privacy Policy is intended to clarify some of AOL's information practices and, in particular, to emphasize the degree to which AOL protects member information. At the Commission's Public Hearing and in an article appearing shortly before the Hearing in the publication Privacy Times, journalist Evan Hendricks made allegations that AOL was not adequately disclosing its privacy policies to its members, was making lists of children available for sale to potential marketers and was disclosing navigational and/or transactional information of its members to potential marketers.

At the outset, it is important to emphasize that AOL makes its Privacy Policy available within its Terms of Service which is well-known and often referred to by our members. AOL also informs members of their ability, both during the initial registration process and any time thereafter, to tell the company not to share any personal information about them at any time, subject only to valid legal requirements to disclose information. The mechanisms for opting out are both easy to use and easy to find. When members initially register for the AOL service they are informed about the fact that we may make our mailing list available to outside companies and that through an area called "Marketing Preferences" they may opt out of this activity. Copies of the registration notification screen and the screens through which members make those choices are attached as Exhibit B.

At the public hearing, AOL made clear that the allegations in Mr. Hendricks article contained many inaccuracies. AOL also testified to the fact that it would make certain changes to the description of its Privacy Policy to ensure that members are indeed fully informed of the company's practices. The following excerpts of the disclosure of member identity information section of our updated Privacy Policy illustrate some of those changes:

We make our mailing list (name and address) available to select independent companies that offer products and information we think may interest you. Additionally, we may make the list with telephone numbers available to companies with which AOL, Inc. has contractual marketing and online relationships for the purpose of permitting such companies to offer products and services over the telephone. AOL, Inc. may also match the Member lists against publicly available third-party data (demographic information, areas of interest, etc.) to develop lists for use by these companies. AOL, Inc. reviews all requests for its lists to ensure appropriateness.

We do not release Members credit card numbers or checking account numbers. Our policy is not to disclose identity information to third parties that would link a Members screen name(s) with a Members actual name, unless required to do so by law or legal process served on AOL, Inc. (e.g., a subpoena). AOL, Inc., at its sole discretion, reserves the right to make exceptions to this policy in extraordinary circumstances (such as a bomb or suicide threat, or instances of suspected illegal activity) on a case-by-case basis.

AOL, Inc. intends to abide by applicable laws governing the disclosure to governmental entities of Individual Information and other records. If we are under a legal obligation to disclose Individual Information to a private citizen or entity, we may make efforts under the circumstances to notify the affected Member(s) in advance of releasing it in order to provide the Member(s) an opportunity to pursue any available legal protection.

The most problematic allegations in Mr. Hendricks article stated that AOL made lists available containing not only members' names and addresses but more granular demographic information impliedly obtained from online activities to unrelated third-party marketers. As is clear from our privacy policy, this is not true. AOL discloses to its members that it only makes member names and addresses available for use and only under tightly controlled and monitored circumstances. In addition, to the extent that information made available to third parties includes phone numbers, such disclosures are made only to companies with whom AOL has ongoing "marketing and online relationships" and subject to the contracts between AOL and those companies. As quoted above, AOL also makes clear that any demographic information attached to mailing lists that AOL makes available is obtained from publicly available data and added only to the names and addresses and not any other information on AOL's own list.

Mr. Hendricks alleged that AOL was making available a "specialized list of 1.4 million AOL members who purchase books, CD ROM, software, games AOL apparel from the AOL STORE, direct mail and telemarketing." Privacy Times, May 30, 1997, p. 2. AOL's then-effective privacy policy stated that the company would not disclose information about what consumers do online or what they buy except to comply with valid legal process. Upon its examination of this allegation, AOL decided that while such a list was consistent with the plain words of our Privacy Policy -- as there was no direct link to where any individual had gone online, nor any information about what specific purchases anyone had made -- it was not consistent with the Policy's spirit since it contained aggregate information about whether purchases of any kind had ever been made online. Therefore AOL decided to cease offering the list which was, incidentally, never actually shared with any marketer. The navigational and transactional information disclosure section of the July 31, 1997 version of the Privacy Policy states as follows:

AOL, Inc. will not disclose to third parties navigational or transactional information (e.g., where you go or what you buy on or through AOL), except to comply with applicable law or valid legal process (e.g., search warrant or court order). While AOL, Inc. may use such information as criteria for developing Member lists for companies with which AOL, Inc. has a contractual marketing and online relationship (referenced in Section B(iii) above), AOL, Inc. does not disclose to any third-party, including the list recipient, which profiling information was used to develop the list.

Finally, since all holders of AOL master accounts are adults and since AOL does not require those master account holders to identify the ages of their secondary screen names, the company does not know which of its screen names are children and has no information about the real offline identity of secondary screen names. Therefore, the company does not and cannot compile lists of children as Mr. Hendricks alleges.⁽²⁾

Instead, from time to time, AOL's lists are cross-referenced with other publicly available information that enables marketers with the requisite permission to use AOL lists to determine simply whether or not the household of a particular AOL member has children.

Unsolicited Bulk E-mail

AOL also participated in the Commission's workshop related to the problem and proliferation of unsolicited commercial e-mail (UCE). The Company made clear at that time that the problem of is serious and one that the company has seen grow significantly during the course of the last year. As with other problems faced by AOL, the company believes that the ultimate solution to controlling the flow of UCE lies in the development and deployment of technological tools to empower users and ISPs to keep certain electronic mail outside of proprietary systems. AOL has implemented several such technological fixes but has yet to find an effective solution.

Given the characteristics of UCE, AOL has also come to the conclusion that the vast majority of the UCE that floods the company's computers is based on fraudulent use of the system. This can include both technological fraud -- like the forging of domain names and header and footer information.⁽³⁾

It can also include more traditional content fraud where products or services are offered under nefarious circumstances. AOL believes that the Commission can and should under its existing authority initiate enforcement actions to prevent these types of fraud from continuing and proliferating further.

Information Collection Policies with Respect to Children

At the public hearing, AOL made clear that it takes the issue of children's privacy extremely seriously and is committed to being an industry leader to help to ensure that parents have control over the use of their children's personal information. As part of William Burrington's testimony at the hearing, he gave a slide presentation which is attached for the record as Exhibit D.

In addition, to supplement the statements made at the hearing, we are attaching, as Exhibit E, AOL's Privacy Policy for Online Focus Groups of Children. Some of our information partners have been interested in conducting online focus groups of children within the Kids Only channel environment. Those partners have and will continue to be required to abide by the attached guidelines whenever they engage in any online research, focus groups or group marketing targeted toward children within the Kids Only channel. The policies are based on the fundamental premise that no such activities can be engaged in without express parental or guardian permission and the policy describes in detail the very thorough parental consent mechanisms that AOL considers appropriate.

July 1997

EXHIBIT A

Effective July 31, 1997

A. INTRODUCTION

(i) General. Because protecting your privacy is very important to AOL, Inc., we have established a privacy policy that safeguards your personal information, and are committed to protecting its confidentiality. We will limit the collection and use of personal information, or Individual Information (as defined below), to what is necessary to administer our business, provide you with the highest quality service, and offer you opportunities we think will be of interest. We will NOT disclose any Individual Information except in the limited circumstances specifically described below. AOL does disclose Individual Information in an aggregated form that does not identify individual Members in order to describe its services to prospective partners, advertisers and other third parties. We actively participate in industry associations and community groups to support strong and effective privacy guidelines and practices in the interactive environment.

(ii) Members Marketing Preferences. AOL provides its Members with choices when it comes to the disclosure of Individual Information (defined below). Our Marketing Preferences area (keyword "Marketing Preferences") provides you with an easy means to remove yourself from AOLs mailing lists, telemarketing lists, pop-up lists and e-mail lists. You can also remove yourself from the lists that we might make available to third parties using the same keyword "Marketing Preferences." You understand that you will receive occasional pop-ups, mailings and e-mails containing important information about AOL or your membership even if you have elected not to receive product information pop-ups, mailings or e-mails.

(iii) Kids Only Area. AOL, Inc. recognizes that children need greater protection of their privacy than teens and adults. AOL, Inc. has special privacy policies that govern the collection, use, and distribution of information about children within the Kids Only Area. See keyword "Families" for more information.

(iv) Types of Individual Information. Individual Information ("Individual Information") is any information, data or records that relate to your AOL membership or use of AOL and identifies you or your individual Member account. The three types of Individual Information are: (1) "identity and billing information," such as your name, street address, telephone number, billing information, and any screen names associated with your account; (2) "navigational and transactional information," such as information about where you go or what you buy through AOL; and (3) "private communications," such as the contents of e-mail, or private chat room or instant message communications.

(v) The Internet. Please be aware that AOL is a private online service that allows access to the Internet, but is not the Internet. AOL, Inc. does not control the content, services, or areas available through the Internet (with minor exceptions, such as the AOL home page), and providers of Internet sites or services have separate data and privacy practices independent of AOL, Inc. Internet areas may appear to be seamlessly incorporated into AOL, but generally you can tell you are on the Internet whenever AOLs logo spins on the upper right corner of your screen or when you click on icons labeled as Newsgroups, Web, Link, FTP, Gopher, or other items relating to the Internet.

(vi) Interactive Content and Service Providers. Companies that are independent from AOL, Inc. operate many of the online areas that you visit. Although AOL, Inc. will seek to require these independent companies (e.g., ICPs, including advertisers and merchants) to adhere to our strong privacy principles, AOL, Inc. does not bear responsibility for their policies or actions. Be aware that when you voluntarily disclose personal information (such as your screen name) in public areas (e.g., the Member Directory, chat rooms, message boards, Internet newsgroups), others may collect and use your information. (When you visit Internet sites, your AOL screen name or other identity information generally is not identifiable.) Also, ordering products through AOL often requires you to provide an independent company with limited Individual Information to enable fulfillment of your order.

B. MEMBER IDENTITY AND BILLING INFORMATION.

(i) Collection and Storage. We maintain the following types of identity and billing information: your name, street address, telephone number(s), length of membership, and payment information. If you wish to view your identity information and billing, please go to keyword "Billing." When feasible, Members may access and verify their Member Identity and Billing Information, and may request corrections to this Information. (See keyword "Billing.") AOL, Inc. generally retains account history records for approximately six months to one year. We may also keep information on your communications with our Customer Service or Community Action departments, and general account history, such as accumulated usage credits or written complaints relating to your account. We safeguard Individual Information from unauthorized access and only authorized employees or agents who need to carry out legitimate business functions are permitted access to Members Individual Information. Employees who violate AOL, Inc.s privacy policies are subject to disciplinary actions, including termination where appropriate. We may use agents, who are bound by strict confidentiality guidelines, to perform storage, processing, and other limited functions on AOL, Inc.s behalf.

(ii) Use. We use identity and billing information to administer our business, ensure that you are properly billed and offer you opportunities (through pop-ups, e-mail, phone calls or direct mail) that may be of interest to you. To develop lists for these opportunities, we may also match Member lists against publicly available third-party data (demographic information, areas of interest, etc.).

(iii) Disclosure. We make our mailing list (name and address) available to select independent companies that offer products and information we think may interest you. Additionally, we may make the list with telephone numbers available to companies with which AOL, Inc. has contractual marketing and online relationships for the purpose of permitting such companies to offer products and services over the telephone. AOL, Inc. may also match the Member lists against publicly available third-party data (demographic information, areas of interest, etc.) to develop lists for use by these companies. AOL, Inc. reviews all requests for its lists to ensure appropriateness.

C. NAVIGATIONAL AND TRANSACTIONAL INFORMATION.

(i) Collection. We may collect and store certain navigational and transactional information, such as data on the choices you make from the range of available services or merchandise, and the times and ways you use AOL and the Internet.

(ii) Use. AOL, Inc. uses navigational and transactional information to personalize AOL, for programming and editorial research and to offer special opportunities to our Members. For example, we use this information to understand our Members reactions to menu items, Content, services and merchandise offered through AOL and to customize AOL based on our Members interests. AOL, Inc. may use publicly available third-party data (demographic information, areas of interest, etc.) to assist us in our programming, editorial research and to offer special opportunities to our Members.

(iii) Disclosure. AOL, Inc. will not disclose to third parties navigational or transactional information (e.g., where you go or what you buy on or through AOL), except to comply with applicable law or valid legal process (e.g., search warrant or court order). While AOL, Inc. may use such information as criteria for developing Member lists for companies with which AOL, Inc. has a contractual marketing and online relationship (referenced in Section B(iii) above), AOL, Inc. does not disclose to any third-party, including the list recipient, which profiling information was used to develop the list.

D. PRIVATE COMMUNICATIONS

(i) Collection and Storage. The AOL computer system does not record or retain any chat room communications, instant message communications, oral online communications or records of with whom you communicate in chat rooms or through instant messages or oral online communications. The AOL e-mail system retains the contents of private e-mail communications for a limited period only. To retain copies of any communication you should store them on your personal computer hard drive or in print form. You agree that AOL, Inc. may employ e-mail virus-checking technology to protect its system and its Members from viruses.

(ii) Use. AOL, Inc. treats private communications on or through AOL as strictly confidential. AOL, Inc. does not access, use or disclose the contents of private communications, except in limited circumstances as specifically provided below. You acknowledge that private communications directed at a person or entity, including AOL, Inc., may be used or disclosed by the intended recipient(s) without restrictions relating to privacy or confidentiality.

(iii) Disclosure. AOL, Inc. does not access or disclose the contents of private communications (e.g., e-mail, instant messages, Member-created private rooms, oral online communications), unless it in good faith believes that such action is necessary (1) to comply with applicable law or valid legal process (e.g., search warrant or court order); (2) to protect the rights or property of AOL, Inc. or may be necessarily incident to the rendition of AOL; or (3) in emergencies when AOL, Inc. believes that physical safety is at risk. AOL, Inc. reserves the right to treat as public any private chat room whose directory or room name is published or becomes generally known or available. AOL, Inc. reserves the right to access and review password-protected Member web sites for conformance to TOS.

1. The company's entire updated Privacy Policy is attached as Exhibit A

2. Mr. Hendricks alleged that AOL lists include "lists of 248,00 children between the ages of 0-6, 354,000 children between the ages of 6-11 and 1, 084,000 between the ages of 12-17." Privacy Times, May 30, 1997, p. 2.

3. An example of several software programs that promote technological fraud like that used by Jill Lesser as an example during the public hearing is attached as exhibit C.