Business leaders vowed Tuesday to implement safeguards for data collected on-line but said they would not be in widespread use by Jan. 1 as the Federal Trade Commission had asked.
Steven J. Cole, general counsel for the Council of Better Business Bureaus, told the House Commerce subcommittee on telecommunications and finance that industry has not had enough time to develop data-collection safeguards.
"It's naive to think that in a rapidly changing environment that a comprehensive, funded, and fully operational program would have been in place so soon," he said. Mr. Cole said that the Better Business Bureau's on-line privacy protection program will be operational by yearend but that not until late next year will most companies will be using it.
Under the program, businesses will be permitted to display the group's seal on their Web sites if they disclose how customer data is used, give consumers a chance to "opt-out" of the data collection, and let people correct inaccurate information. The data must also be secure from theft.
Consumer disputes will be settled through the bureau's mediation procedures. Participants that fail to comply with the group's rules will be forced to remove the seal from the Web site.
Robert Pitofsky, chairman of the Federal Trade Commission, however, urged Congress to impose privacy rules on the industry if the private sector is unable to fully implement safeguards by yearend.
Consumer worries over privacy are hindering the growth of on-line businesses such as electronic banking, he said. Also, he noted that a recent FTC survey that showed only 2% of commercial Web sites adequately disclose how they use personal data collected on-line, even though 92% of the sites collect information on individuals. Also, lawmakers should let the FTC or other agencies implement specific rules for individual industries.
But Mr. Cole said regulations "would be less nimble and would not have benefit of experience that can be gained in the next year or so from watching self-regulation work."
Separately Tuesday, Rep. Jim Leach, chairman of the House Banking Committee, was expected to introduce a privacy protection bill that would make it a federal crime for information brokers to fraudulently obtain customer financial data.