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FTC spotlights proposals on P2P risks

Trade regulators say file-swapping companies are starting to regulate themselves on consumer issues.

The head of the Federal Trade Commission sent a letter to Congress on Tuesday highlighting efforts that file-swapping companies are making to disclose potential online risks.

Legislators have criticized software such as Kazaa, Morpheus and eDonkey for exposing users to spyware, pornography and the risk of lawsuits. Although protesting that their software was no more risky than use of the Internet at large, peer-to-peer companies have worked with the FTC to develop better consumer notification techniques.

The FTC included several of those proposals with its letter to Congress, saying that when implemented, they would do a better job of warning consumers.

"(Peer-to-peer) industry members have developed proposed risk disclosures that we believe would be a substantial improvement over current practices," FTC Chair Deborah Platt Majoras wrote in the letter. "We intend to monitor and report back to interested members of Congress on the extent to which P2P file-sharing program distributors implement these proposed risk disclosures."

The letter follows a tumultuous year in Congress for file-swapping companies, which faced proposed legislation that would have overturned a series of court rulings to make them responsible for copyright infringement on their networks.

That legislation ultimately did not pass but could return next year.

Under the new proposals, consumers would be notified when the software is installed that downloading music, games, movies or software without authorization is illegal. The companies' Web sites would also have detailed information about other possible risks in using the software.

Representatives for file-swapping trade associations said the FTC letter could help show legislators that they are serious about playing by the rules.

"We are grateful for the interest that the Federal Trade Commission has taken in this young industry's efforts at self-regulation," Distributed Computing Industry Alliance Chief Executive Officer Marty Lafferty said in a statement. "We hope the FTC letter to Congress will help foster a better understanding on the Hill of the realities of P2P technologies and of the actions being taken by responsible parties to commercially develop this new distribution channel."

The FTC will hold a two-day session studying the consumer impacts of file-swapping technology beginning Dec. 15.