LAWMAKERS DRAFT WEB - AD PRIVACY SAFEGUARDS

By Emily Steel (The Wall Street Journal)

Advertisers and Internet companies have been scrambling to head off regulation they say will hamper growth of online advertising. The pressure is expected to build Tuesday as lawmakers prepare to announce proposed privacy legislation.

More than a year in the making, the draft legislation proposes regulating Internet companies' tactics for collecting information about Web visitors and the use of that data for ad targeting. It also could apply to the practices for collecting consumers' information in the offline world.

The proposed legislation comes as the furor over privacy issues related to the Internet grows. Lawmakers and regulators say that most consumers experience a great deal of confusion about what information is collected about them and how it is used. Privacy advocates say such tracking has reached alarming levels.

Meanwhile, Internet and advertising companies say that they are capable of regulating themselves and privacy legislation threatens to stifle the $23 billion Internet-ad market.

Rep. Rick Boucher (D., Va.), along with Rep. Cliff Stearns (R., Fla.), plan to post a draft of the bill on their websites on Tuesday, then solicit feedback for a two-month period. Legislators will then revise the bill for introduction during a House subcommittee hearing. To be sure, the proposal doesn't mean that Congress will pass a law.

Mr. Boucher revealed details of the much-anticipated legislation on Monday during a conference for American Business Media, a trade group of business-to-business publications, said Mark Sableman, a partner at the law firm Thompson Coburn and counsel to American Business Media.

Under the current draft, websites collecting information about their visitors would need to disclose to consumers how that information is collected and used, with whom it is shared and the circumstances under which that sharing takes place, Mr. Sableman said. If consumers decide they don't want their information to be collected or used for those stated purposes, they should be able to opt out directly on the site.

The regulation also lays out a separate set of regulations for outside companies that collect information about consumers on websites and target ads to those consumers on other, unrelated sites.

Consumers would need to grant these third-party companies special permission for their data to be collected. The draft legislation provides some exceptions. The ad company wouldn't need to solicit permission to collect information about consumers if the targeted ad includes a link that explains which company was involved in making the ad appear, shows consumers what information is collected about them and gives them the chance to opt out.

The draft also includes special restrictions for the collection of sensitive information, including financial information, medical history, government identifiers such as drivers' license and Social Security cards and information about children or adolescents.

The legislation would grant authority to the Federal Trade Commission to endorse the provisions of the bill.

"We haven't seen the bill, but protecting privacy is a priority for the FTC, as it is to Congressman Boucher, and we're eager to work with Congress as it crafts legislation to address privacy concerns," FTC Chairman Jon Leibowitz said in a statement.

"Although I do not support all of the provisions in the draft, I look forward to getting back comments to improve the bill and then hopefully advance it through the committee process," Rep. Stearns said in a statement, noting that it was premature for him to comment on the legislation as it has yet to be made public. He said that the bill is based on earlier privacy legislation that he developed in 2005.