BBB privacy project faces critics

But as the well-known organization gets ready to launch its BBBOnline privacy protection program in March, the pressure is on to not just deliver the goods, but to help consumers' control their personal information better than regulators.

Privacy advocates, industry members, and government officials--including Vice President Al Gore--are relying on the success of voluntary industry programs such as BBBOnline.

The self-regulatory efforts are expected to quell consumer fears about shopping and interacting on the Net and to satisfy a wide range of complaints about U.S. industry data collection practices. They also are aimed at preventing the government from having to pass legislation aimed at protecting consumers' privacy online.

The most critical issue is settling a conflict over the European Union's strict privacy directive that went into effect in October and is expected to be adopted by all 15 members of the union.

The EU law will give citizens new control over their computerized personal data and prevent firms from exchanging the information with countries that do not provide "adequate" protection, such as letting people "opt out" and making clear who else will have access to the data.

"If the privacy protections by the private sector can be spread internationally, that will become the de facto way privacy is protected and that will diffuse this disagreement," former White House e-commerce adviser Ira Magaziner said at an industry forum Monday.

BBBOnline promises to unveil its entire privacy program by the second half of March. The program includes the following efforts: Requiring participating Net sites to post their data collection practices; monitoring sites for compliance; and handling consumer complaints through the Council of Better Business Bureaus. If a company is found guilty of abusing personal data, its BBB seal will be revoked.

This similar to the tack taken by the only other privacy program on the market, TRUSTe, which had licensed its "seal of approval" to 424 sites by the end of last year.

Depending on gross sales, companies will pay from $150 to $3,000 per year to participate in BBBOnline. Its corporate sponsors, many of whom also support TRUSTe, have forked over at least $50,000 each to help build the program. AT&T, Hewlett-Packard, Netscape Communications, and Microsoft are among the backers.

Still, TRUSTe is more grassroots and only launched in October 1996, so BBB's offline name recognition is driving up expectations.

However, although BBBOnline is working to set things in motion, scrutiny is heating up because it has taken longer than planned to get the project off the ground.

"People want to sink more money into the BBBOnline system because it has more name recognition, but it's just not happening," said a source close the BBBOnline board, who spoke on condition of anonymity.

"It's frustrating because people are relying on them," the source added. "We are considering bailing on the whole BBBOnline thing to put more backing behind TRUSTe because they are rolling along and have a good framework."

Others are less critical.

"We think they are going to have a well-put-together, robust system, and that is why it is taking as long as it is," said Scott Cooper, manager for technology policy at Hewlett-Packard.

"BBBOnline is the last, best hope for self-regulation in this area," he added. "Their standards will be very high and BBB has pledged to take complaints about any Web site--even if they aren't a member--and pass that on to the Federal Trade Commission."

Added Jerry Berman, executive director of the Center for Democracy and Technology, who advises BBBOnline's privacy steering committee, "Progress may be slow, but it's progress."

BBBOnline senior vice president Russell Bodoff has maintained that the program was always scheduled to launch in the first quarter of this year. When the plan was announced, however, the goal for launch was year-end 1998.

"The program basically has been getting tested and the board is expected to approve it in February," said BBBOnline board chairwoman, Bojana Fazarinc, who also is the director of global marketing services and communication for Hewlett-Packard.

"Things are on track," she added. "This will be a comprehensive program, not a piecemeal approach."

Another BBBOnline program, its reliability seal, already is in place and has 2,300 participants, she noted. If a site carries that seal it means the BBBOnline has visited the company in person, among other checks, to ensure it can back up the services it is pitching on the Web.

Web sites that carry the reliability seal and BBB members in the offline world will not be required to sign up for the privacy program, however. That is one factor drawing criticism from privacy advocates.

"They're severing the seal--the value of the BBB brand will not carry over to the privacy debate if all of its members are not required to adopt the privacy guidelines," said Marc Rotenberg, executive director of the Electronic Privacy Information Center.

Former FTC Christine Varney, who now represents the Online Privacy Alliance, has argued that smashing online holiday sales prove that consumers are more trusting now. In part, she credits voluntary privacy polices for the boom.

Rotenberg argues, however, that increased Net sales doesn't eliminate the need for uniform privacy protections based on laws.

"Public demand for privacy protection on the Net is only going to increase as people go online to do their business. They will realize that this is not so abstract," he added.

BBBOnline hopes to be the insurance card for those consumers. And the program will be closely watched in the United States and abroad.

"What we've been developing for the program has been conceived with the European hot buttons in mind," BBBOnline's Fazarinc said. "The BBBOnline has created the standard for dispute resolution mechanisms in this country, and that will be the same online."