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McCain-led group introduces Net privacy bill

A bipartisan group led by the Arizona senator initiates legislation that would require merchants doing business on the Internet to disclose the kind of personal information they collect from customers.

The movement to protect the privacy of online shoppers got a boost today from a bipartisan group of senators led by former presidential hopeful John McCain.

The senators introduced a bill that would require online merchants to disclose the kind of personal information they collect from customers as well as making them post a "conspicuous notice" of the ways they intend to use that information.

"Too many privacy policies confuse and contradict rather than provide a conspicuous notice of a consumer's rights," McCain, R-Ariz., said in a statement. "The more we do to protect consumers' privacy rights, the more we facilitate the burgeoning growth of the Internet."

The bill is the latest response to news first reported by CNET News.com that the failed e-tailer Toysmart.com had attempted to auction off customers' personal information as part of a liquidation sale. Yesterday, U.S. Bankruptcy Judge Carol Kenner granted a request by Toysmart to temporarily withdraw the information from auction because of the mounting objections against the sale.

Toysmart, an e-commerce company in which Disney holds a majority stake, ceased operations in May.

The Federal Trade Commission filed suit against Toysmart in federal court last month over the proposed sale of the personal data. The two sides reached a settlement last Friday. Also last week, 39 states filed a complaint trying to block the sale. That complaint is still on file.

Also, under the bill, e-tailers must inform consumers about who is collecting their personal information and consumers must be able to limit that use.