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Giants team for privacy self-regulation

Worried that privacy concerns are keeping consumers off the Net, players including IBM, HP, and Disney are forming an alliance aimed at self-regulation.

Worried that privacy concerns are keeping consumers off the Internet, major Net players including IBM, Hewlett Packard, Disney, AT&T, and others are pulling together an alliance aimed at privacy self-regulation with teeth.

Although no details have been finalized, discussions are under way with the Better Business Bureau for that agency to serve as a clearinghouse for consumers' privacy complaints and to resolve disputes between consumers and online sites.

The still-unnamed alliance is expected to be announced in the next month, around privacy hearings the Commerce Department is scheduled to have, according to sources familiar with its operations. Its goals are to educate both consumers and businesses on the importance of online privacy, publicize existing protections, and establish mechanisms to handle privacy disputes--all in the framework of industry self-regulation.

However, some members think legislation may be needed to protect the privacy of children and individuals' medical records. Companies joining what organizers hope is a broad, cross-industry alliance would pay dues to fund its work.

One Washington-based privacy advocate welcomed the industry effort.

"We're glad that industry has taken privacy seriously as an issue, and we're still waiting for what it puts forward," said Ari Schwartz, policy analyst at the Center for Democracy and Technology (CDT). "We're going to put our own initiative forward with other privacy advocates."

Schwartz was referring to nascent talks involving the CDT, the Electronic Privacy Information Center (EPIC), consumer groups, and civil liberties organizations to create a common position on data privacy.

The industry talks involving online companies and trade groups also have included Christine Varney, the former Federal Trade Commissioner who last year chaired the FTC's privacy hearings. Those hearings concluded with no action but an expectation that the private sector would pursue self-regulation.

But Varney has criticized industry efforts, saying in February that self-regulation might not be enough. Varney could not be reached for comment.

The privacy alliance has caught the attention of White House e-commerce czar Ira Magaziner, who last month cited the effort as an example of activity that might head off federal legislation and regulation.

Yesterday, Vice President Al Gore turned up the heat on the privacy issue, calling for an "electronic bill of rights" and legislation to guard the privacy of medical records.

Although administration pressure is building on privacy, participants in the industry effort cite polls that show consumers continue to worry about their personal data online.

"Consumers have a lot of concern that there isn't adequate privacy protection online," said Scott Cooper, manager of technology policy in Hewlett Packard's Washington office.

Another factor behind the push is a European Union directive, due to take effect in October, that personal data cannot be sent to nations that don't have strong privacy protections. The U.S. government is trying to convince the Europeans that U.S. self-regulation will meet their requirements.

America Online, which has had several well-publicized privacy glitches, is participating in the privacy alliance talks. Other companies involved, according to HP's Cooper and IBM sources, include EDS, American Express, Dell Computer, Microsoft, Netscape Communications, Bell Atlantic, Dun & Bradstreet, Lucent Technologies, Procter & Gamble, and Lexis-Nexis.

Trade groups involved in the talks include the Information Technology Association of America, a banking group affiliated with the Bankers Roundtable, health care organizations, and TRUSTe, the best-known industry-based privacy group.

However, similar private-sector efforts in the past three years have fallen short of producing visible results, as Washington privacy advocates have noted.

"The industry is trying to address the privacy issues and educate not only consumers but also businesses on why they must address this issue," said Paola Benassi of TRUSTe. "We are looking to come up with a mechanism to deal with complaints and a clearinghouse."