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Members of the U.S. Senate Committee on Commerce, Science, and Transportation asked heated questions in showing their concern about personal information being used in online profiling, and testimony from ad companies DoubleClick and Engage did little to calm them. “If local shops did things like this, we’d be outraged,” said Sen. Richard Bryan, D-Nev., at the hearing earlier this week. “Absent legislation, meaningful enforcement, and airtight coverage, online profiling will eviscerate personal privacy,” said Sen. John McCain, R-Ariz., the committee’s chairman. All six committee members present at the hearing suggested that legislation would be necessary. The hearings were held a month after the Federal Trade Commission said in a report endorsed by only three of its five commissioners that self-regulation of the Internet has failed to adequately protect consumer privacy and asked for more FTC authority to protect consumer privacy online. Answering stern and forceful questions from committee members about online profiling technology, Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection, said the commission has had “good talks” with the online advertising industry on self-regulation policies but would not commit as to whether such agreements would completely eliminate the need for federal legislation. She rated the percentage of major online advertising agencies that have agreed to such policies as “better than half and half.” These agencies represent 90 percent of the companies that use tracking technology in banner advertisements on the Web. The talks focus on the way the companies should disclose profiling practices and how and when consumers should be able to “opt out” of the process. At issue were “cookies” and other methods that allow advertisers to collect data on the surfing habits of consumers, often without the users’ knowledge, and to use the data to deliver advertisements targeted to the Web user’s personal interests. Bernstein fueled committee concerns in an opening slide presentation showing that during 15 minutes of Web surfing by an FTC staff member, 124 cookies were planted on the staff member’s computer. When asked for the FTC’s position, Bernstein replied, “Principally, one wants to put the consumer in a position of control of this information.” INFORMATION THAT’S ‘NONE OF THEIR BUSINESS’ If an agreement is reached and endorsed by the FTC, it would allow the commission to seek fines and other disciplinary actions against companies that violate those standards and collect information surreptitiously. Noting that the rules would be binding only on companies that agree to participate, Sen. Ron Wyden, D-Ore., commented, “So people who are not signatories to this voluntary agreement can do anything they darn well want. I don’t think that’s right.” Wyden has sponsored a bill to regulate how and when companies can collect personal information from people on the Internet. Earlier this year, DoubleClick, a leading Internet advertising firm, announced plans to combine anonymous data about Web users with personal information from its Abacus Online database and other databases. The announcement outraged privacy-rights advocates and prompted an FTC investigation. DoubleClick suspended the plan until an industry-government agreement on what practices are appropriate was developed. DoubleClick’s chief privacy officer, Jules Polonetsky, told the Senate committee that, while the company does not place ads based on personal profiles, it would “probably have 40 million to 50 million” such dossiers on Internet users “when we do.” Daniel Jaye, chief technology officer of Engage Technologies, told the committee Engage does not collect any information that ties cookies to names. Richard Smith, an Internet consultant, said, however, that he has found evidence of personal information being leaked from Web sites to advertisers. Smith said he had tried to learn more about diabetes on a popular Web health site and entered his e-mail address and the word “diabetes.” Smith said this information was transmitted without his permission to DoubleClick and that other well-known sites like AltaVista, RealNetworks, and Travelocity have passed along personally identifying information to DoubleClick. “The data collection systems that the Internet ad companies are currently running are getting personal and sensitive information that almost everyone will agree is none of the business of these companies,” Smith said. “It’s almost like they have put hidden microphones in our homes and our offices, and they are listening to what we do all day long.” Polonetsky said that the transmission of personal data is inadvertent. “We don’t save it, or keep it at all. It won’t ever be involved in how we deliver ads,” Polonetsky said. He said DoubleClick only uses basic geographic information derived from a user’s Internet address to target its ads. It also uses cookies to ensure that a person does not see the same ad repetitively, but no other personal information is saved, Polonetsky said. Marc Rotenberg, director of the Electronic Privacy Information Center, said Internet users should have the choice up front about whether they want companies collecting information about them online. “In the matter of DoubleClick, we first brought the committee’s attention to this problem at a similar hearing a year ago. We warned that self-regulation would fail to protect privacy and that there would be a public backlash against the company’s plan to profile Internet users. We think the lesson is clear that legislation is necessary. Even good models for online advertising can quickly change without baseline privacy rules,” Rotenberg said. MICHIGAN ATTORNEY GENERAL TAKES ACTION In Michigan, the day before the Senate hearing, Attorney General Jennifer Granholm addressed the issue on her own. She announced that she has threatened legal action against four Web sites-Johnson & Johnson’s procrit.com; children’s retailer AmericasBaby.com; Internet Friends Network, a video chat site with explicit content; and the Stockpoint financial site-that she said have not told consumers whether their privacy rights are being protected under state law. All four companies use DoubleClick, as well as two other ad agencies — AdForce and MatchLogic. Granholm said that she notified the companies after lawyers in her office found that Internet advertising agencies were tracking site visitors with “cookies” deposited on users’ hard drives. Greater disclosure of privacy practices will allow companies to avoid prosecution, she said. Procrit.com spokesman John McKeegan said, “We have taken every step that we can from a technical, contractual to a legal point of view to ensure that people who use procrit.com are assured a completely anonymous experience.” The site’s legal disclaimer “does specifically say that personally identifiable information will not be sold or shared with others,” McKeegan said. Stockpoint said in a statement that it has a company policy “that addresses the use of ‘cookies’ and the disclosure of personal information by Stockpoint and third parties” and that it will post its policy “following the completion of our internal review process.” A statement explaining iFriends’ connection to DoubleClick was added to the site Tuesday morning.

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