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After facing a barrage of suits and a Federal Trade Commission investigation into its use of individuals’ personal data and Web-surfing habits, DoubleClick Inc., tried to assuage Internet users’ concerns. The online advertising company last March created a new position — chief privacy officer — hiring former New York City commissioner for consumer affairs Jules Polonetsky to fill it. DoubleClick is not alone. A number of dot-coms have hired CPOs, including Ray Everett-Church for AllAdvantage.com and Chris Kelly for [email protected] And their ranks are sure to grow, given the deal reached July 27 between the FTC and the Network Advertising Initiative to curtail the release of such confidential data. Essentially, a chief privacy officer is the point person in an online company responsible for confronting a wide range of privacy issues. The deal reached by the NAI — whose members include online advertising firms such as DoubleClick and 24/7 Media, Inc. — doesn’t require hiring a CPO. But many companies already have taken the step, rather than wait for their own “Data Valdez,” says Dave Steer of TRUSTe, an Internet privacy organization, referring to Exxon’s catastrophic 1989 oil spill. “There’s been an explosion in the number of companies who realize they have exposure on the privacy issue and need someone at sufficiently high a level in the organization to monitor privacy and drive their compliance efforts,” says Everett-Church, who a year ago left Arlington, Virginia’s Haley Bader & Potts to become chief privacy officer at AllAdvantage.com, a company that pays people for the right to monitor their Web surfing. As experts on the latest tracking technology as well as on privacy and consumer protection law, CPOs, who are usually lawyers, develop a company’s privacy policy and train staff to follow it. That’s particularly important when the company enters into a joint venture or merger, which can involve other companies that have distinct databases and privacy pledges. “Once you put up a policy, if you violate it, you’re subject to sanctions from the FTC for false and deceptive advertising,” explains Kelly, formerly an associate at Palo Alto’s Wilson Sonsini Goodrich & Rosati and now chief privacy officer for [email protected] “Consumers recognize some data needs to be collected, and are willing to allow that under some circumstances,” adds Eugene Volokh, a professor at University of California�Los Angeles School of Law specializing in cyberspace and privacy law. “But figuring out what different kinds of consumers want in different circumstances is a full-time job.” Some privacy officers spend their time trying to convince other companies to hire CPOs to improve the industry’s image. Everett-Church explains: “Even though we have a strong privacy policy and vigorous compliance effort, we have suffered right along with a lot of companies in being lumped into the negative press that’s surrounded privacy problems.” The settlement between the FTC and the NAI sets up a self-regulatory mechanism to prevent the unwanted profiling of individual users. Under its terms, advertising firms must notify Internet users if they track Web surfing. The agreement also allows consumers to decline to have personal information, such as their name or address, combined with Web usage. The deal, culminating a year’s worth of negotiations, keeps policing efforts in the industry’s hands. Despite the fanfare surrounding the deal, the FTC, in the report it issued in conjunction with the settlement, renewed its call for Congress to enact privacy legislation. Currently, there is little regulation in the area of cyberspace privacy other than the Child Online Privacy Protection Act, which requires online companies targeting children under 13 to get parental consent before obtaining personal information from children. While Congress has been considering several other bills, including the Consumer Privacy Protection Act which would let consumers keep control over their information after providing it to a Web site, the likelihood of enactment this year is uncertain. While many Internet companies do not oppose limited regulation in this area, they’re hoping that their CPOs can influence the scope. “There’s been a lot of work with public policy makers — regulators and government officials — explaining the architecture of the Internet and the effect of privacy regulations that have been proposed,” says Kelly. But apart from lobbying efforts, will these new CPOS actually be able to protect consumer privacy? The answer may depend on the clout their employers give them. “Do they have the ability to veto a proposed practice, or are they just sent out to justify controversial policies and give an appearance of sensitivity on the part of the company?” asks David Sobel, counsel for the Washington, D.C.�based Electronic Privacy Information Center. Some expect power struggles between CPOs and marketing departments to erupt. “From an institutional perspective it’s good to have somebody in an organization who’s required to focus on this issue,” says Volokh, but “a privacy officer is looking at the long term, and others in the company are looking at the immediate bottom line, which may prevail.” Ultimately, advertising firms — and the businesses they represent — must “face the importance of information to what they do and how they do it,” warns FTC commissioner Mozelle Thompson, who was one of the four commissioners voting in favor of the agency’s deal with the NAI. “It’s going to be really important how they treat and maintain the integrity of that information. It’s the key to consumer confidence.”

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