New Federal Trade Commission chairman Timothy J. Muris, who held a number of high-level staff jobs at the FTC in the 1980s, recently observed that the most striking change at the agency since he left 16 years ago was the FTC’s focus on protecting consumer privacy. Privacy has become a central part of the FTC’s consumer protection mission, and the FTC will devote even more attention to privacy issues in the future. In a recent speech outlining his new "Privacy Agenda," Muris announced that he plans to increase resources dedicated to privacy protection by 50 percent.
Perhaps the most eye-catching proposal is the creation of a national "do-not-call" list for consumers. Currently, consumers can take advantage of the voluntary do-not-call list administered by the Direct Marketing Association, or they can direct each telemarketer who calls them that they don’t want to receive calls in the future. To give consumers a more efficient way to prevent unwanted calls, Muris has also promised to explore giving consumers a middle option - one that would allow some calls, but expand the limits on when calls can be made. However, telemarketers have cause to be concerned about the impact of this proposal.
Agenda Focused on Enforcement
Most of the other items on Muris’ "Privacy Agenda" involve expansion of traditional enforcement efforts directed against unfair and deceptive practices, rather than new initiatives. According to the FTC chairman, "We need more law enforcement, not more laws." For example, Muris has called for beefing up enforcement efforts against deceptive spam, identity theft and "pretexting" - the practice of fraudulently obtaining personal financial information, like account numbers and balances, often by calling banks under the pretext of being a customer.
Muris also emphasized the importance of enforcing privacy promises posted by businesses on their Web sites. The FTC has brought several cases challenging violations of promises made in online privacy policies, and Muris has promised expanded review of compliance. "We will seed lists with names to ensure restrictions on disclosures to third parties are honored," he says. "We will also increase our scrutiny of information practices that involve deceptive or unfair uses of sensitive data - such as medical or financial information or data involving children."
Muris Gives Self-Regulation a Chance
The FTC’s chairman remains skeptical of the need for broad-based online privacy legislation. Proponents of such legislation believe that industry self-regulation has failed, and argue that new federal legislation could increase consumer confidence in the Internet by establishing a clear and consistent set of rules about how personal information can be collected and used. But Muris believes it is too soon to conclude that we can fashion workable legislation to accomplish these goals. "The recent experience with GrammLeach-Bliley privacy notices should give everyone pause about whether we know enough to implement effectively broad legislation based on notices," he observes. "Acres of trees died to produce a blizzard of barely comprehensible privacy notices."
Muris also expressed concern about something that is dear to the hearts of many direct marketers - the use of "pre-acquired account information," including credit card account numbers of potential customers. According to some at the FTC, pre-acquired credit card numbers have been used - or abused - to bill consumers who believed they were simply accepting a free trial membership in a discount buying club, or to bill consumers even when they did not accept the offer. "I will recommend to my colleagues that we amend our Telemarketing Sales Rule to ensure that, if sellers have this sensitive credit information, consumers are only charged if they really want to buy the item," Muris says. In the meantime, the industry continues to wait for a final resolution to the FTC’s long-running investigation of Triad Marketing, the granddaddy of the free-trial club membership upsell.