July 6, 1998

Jane Coffin

Office of International Affairs

National Telecommunications and Information Administration

U.S. Department of Commerce

Room 4898

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Dear Ms. Coffin:

The Coalition for Advertising-Supported Information and Entertainment (CASIE) appreciates the opportunity to submit these comments on the Commerce Department staff paper "Elements of Effective Self Regulation for Protection of Privacy." The "elements paper" and the recent Department of Commerce privacy summit have played a valuable role in encouraging the various self-regulatory efforts now under way in the private sector.

CASIE is a joint effort of the Association of National Advertisers (ANA) and the American Association of Advertising Agencies (AAAA). Formed in 1994, it’s mission is to ensure that advertising will remain a key funding source for information and entertainment services in the evolving world of telecommunications and the new interactive media.

The business community understands that the tremendous potential of the Internet will not be realized unless the public feels secure in entering and using the global interactive marketplace.

We agree with Secretary Daley that privacy is "the make-or-break issue for all of electronic commerce."

CASIE believes there are three critical forces which, when combined, can best protect the online privacy interests of consumers: (1) strong, effective self-regulation; (2) technological tools which empower web users to control the disclosure of information; and (3) government enforcement under existing legal authority. None of these forces, standing alone, is a panacea or a total solution.

The advertising industry’s self-regulatory program presents an excellent example of the private sector and government complementing and reinforcing each other in an effort to protect consumers. The National Advertising Division (NAD) and the National Advertising Review Board (NARB) are units of the Council of Better Business Bureaus (CBBB). Children’s advertising is closely monitored by a separate Children’s Advertising Review Unit (CARU) within the NAD. The mandate of these groups is to ensure the truthfulness and accuracy of national advertising claims. NAD’s caseload is drawn from consumer complaints, challenges from competitors and its own monitoring of advertising. In those very few instances where the NAD or NARB are unable to resolve a case, it is referred to the Federal Trade Commission (FTC) or other appropriate government agency for further action. FTC Chairman Robert Pitofsky has called this system a "model" example of effective self-regulation.

Unlike earlier media forms, the Internet has exploded on the scene in a manner which is virtually unprecedented. Cyberspace presents a similar challenge to both government and traditional self-regulation programs: how do you police an environment which knows no political boundaries and is constantly growing and changing? Neither government nor the private sector can wave a magic wand to find quick or easy solutions to regulate the cybermarketplace. Further, due to the international character of the medium, the government should avoid locking in rules that could put us at a competitive disadvantage with other countries.

There has been meaningful progress on self-regulatory efforts in the past year.

CASIE is a member of the Online Privacy Alliance, which was formally launched on June 22nd. The Alliance and all of its members are strongly committed to meeting the Administration’s challenge to develop a strong, effective program for self-regulation in the online marketplace. The Alliance has adopted a set of guidelines for online privacy practices and a very strong set of principles for children’s online activities.

The "elements paper" describes nine specific characteristics of effective self-regulation for privacy: awareness, choice, data security, data integrity, consumer access, accountability, consumer recourse, verification and consequences. We believe that the Alliance work product directly addresses each of these components. There is much more to be done, particularly in the area of enforcement. As Christine Varney’s statement on June 22nd noted, "These documents reflect a beginning. The Online Privacy Alliance members are committed to continuing their work on these issues so that privacy can be a reality for everyone on the Internet."

Another example of a private sector response is the new privacy project of BBBOnline. The Council of Better Business Bureaus (CBBB) announced on June 22nd that it will be developing a major privacy program through its subsidiary, BBBOnline. The Council has contracted with Alan Westin of Columbia University, a noted authority on privacy issues, to help build an effective "privacy seal" program which includes verification and consumer dispute resolution. ANA and AAAA are working closely with BBBOnline on the development of this program. Several ANA members are also working with TRUSTe, another non-profit group which is developing a privacy seal program.

Our associations have been active in this area for several years. In 1996, CASIE announced a set of goals for privacy in online marketing. The text of those goals is attached to our statement. The key principles underlying the CASIE goals are consumer notice and sovereignty over the collection and use of individually identifiable information collected online. ANA and AAAA have continually encouraged our members to adopt online privacy policies consistent with the CASIE goals. In recent months there has been a substantial increase in the number of member companies which have posted online privacy policies.

We recognize that children are a unique audience and deserve special protections. Our associations were actively involved in developing the children’s online guidelines adopted last year by the Children’s Advertising Review Unit (CARU). We have strongly urged companies which market to children to adopt privacy policies consistent with the CARU guidelines.

CASIE also has worked with a broad coalition of other groups to develop technological solutions to privacy concerns. Programs such as the Platform for Privacy Preferences, or P3P, will enable parents and consumers to enjoy the full potential of the Internet while still protecting their privacy interests.

At the time we issued the CASIE privacy statement, we emphasized that due to the embryonic nature of interactive media, it was premature for industry or for government to try to impose rigid rules for the online environment. We believed then and we believe now that there is no need for a whole new regulatory regime for online privacy. Effective self-regulation and consumer empowerment, backed up by appropriate law enforcement under existing authority, can protect the privacy interests of families and consumers in the online world.

The Federal Trade Commission, the Securities and Exchange Commission, federal bank regulatory agencies and the state attorneys general already have broad authority to act where online information collection practices are false, deceptive or unfair. CASIE and the other members of the Online Privacy Alliance believe these agencies should bring enforcement actions in appropriate cases.

We believe it is critical that online privacy be addressed through a sectoral approach, rather than a one-size-fits-all regime imposed by the government. Not all information is created equal and different industry sectors have different information practices and needs. While the members of the Online Privacy Alliance have agreed on key elements, we have always recognized that policies must be customized to reflect differences in business sector practices.

In CASIE’s view, there are multiple forces that will increasingly transform cyberspace from a seemingly uncharted information jungle into an area where the public can travel safely:

First, the economic self-interest of business will play a major role to assure the public of fair treatment. Failure of the business community in the privacy area would drastically limit the use of the Internet and undermine the interactive media as a significant marketing tool. This will not happen, as national advertisers spend millions of dollars building a brand name and reputation and don’t want to tarnish it by offending consumers. Many companies have already adopted strong internal programs to protect the privacy interests of their customers.

Second, self-regulatory efforts by CARU, BBBOnline, TRUSTe and many other groups will help accelerate this process. It is important to note that self-regulation is a long term, on-going effort and that we are still relatively early in the process. Also, regulating cyberspace presents complex challenges to both government and the private sector.

Third, educational efforts by business, government, and consumer groups will provide members of the public with a far greater awareness and ability to protect themselves.

Fourth, the public’s experience with the information media is growing exponentially. This sophistication will lead to increasing demands for the development of business norms and policies as it has in all other media.

Fifth, technological tools already provide the public with unprecedented controls over what comes in and out of the home by interactive media and these capacities will continue to grow with projects such as P3P.

Sixth and finally, the government and our traditional self-regulatory systems will see to it that there will be enforcement of norms of truth and accuracy in online marketing.

We appreciate the opportunity to provide these comments. We commend the Commerce Department for holding the recent privacy summit and publishing the "elements paper." We hope the government will give all interested parties more time to work together on real solutions, before attempting to impose an overly restrictive regulatory regime which is likely to undermine the cybermarketplace.

Sincerely,

Daniel L. Jaffe Harold A. Shoup

Executive Vice President Executive Vice President

Association of National Advertisers American Association of Advertising Agencies

700 11th Street, N.W., Suite 650 1899 L Street, N.W., Suite 700

Washington, D.C. 20001 Washington, D.C. 20036

(202) 626-7800 (202) 331-7345

The Association of National Advertisers, Inc. (ANA) is the industry’s oldest trade association and the only organization exclusively dedicated to serving the interests of corporations that advertise regionally and nationally. The Association’s membership is a cross-section of American industry, consisting of manufacturers, retailers and service providers. Representing more than 7,300 separate advertising entities, these member companies market a wide array of products and services to consumers and other businesses. ANA represents the needs of its members through advertising industry leadership, legislative leadership, information resources, professional development and industry-wide networking.

The American Association of Advertising Agencies (AAAA) is the national trade association of the advertising agency business. Its more than 1300 advertising agency offices across the country produce approximately 80% of all national advertisements, as well as significant portions of regional and local advertising. AAAA is dedicated to the preservation of a robust free market in commercial ideas.

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