[]{#__RefHeading___Toc482461010 .anchor}FTC Advisory Committee on Online
Access and Security

Final Report -- Second Draft

08 May 2000

[[FTC Advisory Committee on Online Access and Security
1]{.smallcaps}](#__RefHeading___Toc482461010)

[1 Introduction 3](#introduction)

[2 Online Access 4](#online-access)

[2.1 What is Access? 4](#what-is-access)

[2.2 What is Personal Information? 5](#what-is-personal-information)

[2.3 Who Provides Access? The Third-Party Issue
6](#who-provides-access-the-third-party-issue)

[2.4 Cost of Access 8](#cost-of-access)

[2.5 Access Options 8](#access-options)

[2.5.1 Access Option 1: Total Access Approach
8](#access-option-1-total-access-approach)

[2.5.2 Access Option 2: Default to Consumer Access
9](#access-option-2-default-to-consumer-access)

[2.5.3 Access Option 3: Case-by-Case Approach Including Sectoral
Considerations
11](#access-option-3-case-by-case-approach-including-sectoral-considerations)

[2.5.4 Access Option 4: Access for Correction
13](#access-option-4-access-for-correction)

[2.6 Authentication 14](#authentication)

[2.6.1 Ways of addressing the authentication problem
15](#ways-of-addressing-the-authentication-problem)

[3 Security 18](#security)

[3.1 Competing Considerations in Computer Security
18](#competing-considerations-in-computer-security)

[3.2 Directing Computer Security -- Preliminary Considerations
18](#directing-computer-security-preliminary-considerations)

[3.3 Notice and Education 19](#notice-and-education)

[3.3.1 Notice 19](#notice)

[3.3.2 Consumer Education 20](#consumer-education)

[3.4 Options for Setting Web site Security Standards
20](#options-for-setting-web-site-security-standards)

[3.4.1 Security Option 1: Rely on Existing Remedies
20](#security-option-1-rely-on-existing-remedies)

[3.4.2 Security Option 2: Maintain a Security Program
21](#security-option-2-maintain-a-security-program)

[3.4.3 Security Option 3: Rely on Industry-Specific Security Standards
21](#security-option-3-rely-on-industry-specific-security-standards)

[3.4.4 Security Option 4: "Appropriate Under the Circumstances" -
Standard of Care
22](#security-option-4-appropriate-under-the-circumstances---standard-of-care)

[3.4.5 Security Option 5: Sliding Scale of Security Standards
23](#security-option-5-sliding-scale-of-security-standards)

[3.5 Security Recommendation 24](#security-recommendation)

[4 Other Considerations not Addressed
25](#other-considerations-not-addressed)

[4.1 Enforcement Alternatives 25](#enforcement-alternatives)

[4.2 Advancing Technologies 25](#advancing-technologies)

[4.3 Security Incident Data -- Industry Sharing With The Government
25](#security-incident-data-industry-sharing-with-the-government)

[5 Charter of the Federal Trade Commission Advisory Committee on Online
Access and Security
26](#charter-of-the-federal-trade-commission-advisory-committee-on-online-access-and-security)

# Introduction

The purpose of the Advisory Committee on Online Access and Security
("ACOAS" or the "Advisory Committee") is to give advice and
recommendations to the Federal Trade Commission ("FTC") concerning
providing online consumers reasonable access to personal information
collected from and about them by domestic commercial Web sites, and
maintaining adequate security for that information.

In particular, the Charter of ACOAS directs that the Advisory Committee
"will consider the parameters of reasonable access to personal
information and adequate security and will present options for
implementation of these information practices in a report to the
Commission." (Charter of the Federal Trade Commission Advisory Committee
on Online Access and Security "Charter," attached hereto as addendum A).

This is the final report of ACOAS. The Advisory Committee considered
access and security as it relates to online information. The context of
this committee\'s consideration was not to provide consensus definitions
or options for legislation, mandatory regulation or self-regulation; nor
is the report intended to replace more detailed and industry-specific
initiatives in fields regulated by law, such as health care and
financial services. Rather, the Advisory Committee here presents a range
of definitions or options that have been identified as ways to implement
Fair Information Practice principles of access and security. Except for
security, no one definition or option represents a consensus of the
members of the Advisory Committee.

# Online Access

"Access" to personal data is the first principle that the Committee
addresses. As the Committee's deliberations revealed, this principle of
the Fair Information Practices can be complicated -- and controversial.
This Section seeks to unpack the concept of access in a way that helps
Web sites and policymakers understand the difficult questions that must
be answered in fashioning an access policy.

We first identify the questions that must be answered in defining access
-- does it mean only an ability to review the data or does it include
authority to challenge, modify, or even delete information?

We then ask "Access to what?" What is personal information for purposes
of the access principle? Businesses gather a wide variety of data from
many sources. Information is sometimes provided by the individual
consumer and sometimes by a third party. At times it is inferred or
derived by the business itself, using its own judgment or processes. And
sometimes the data is imperfectly personalized -- it relates to a
computer that may or may not be used only by one person. How much of
that data is covered by the access principle?

Our third overarching question is "Who provides access?" Is it just the
entity that gathered the data? Does it include its corporate affiliates
and agents? Or every company to which the data may have been passed?

The last of our ground clearing questions is "How easy should access
be?" Should Web sites charge a fee to cover some or all of the cost of
providing access? Is it fair to impose limits on multiple or duplicative
access requests? How much effort is required to gain access?

Having explored these questions, the Committee next lays out four
illustrative options that show the many different ways in which the
access principle could be implemented. The broadest option, Option 1,
would give consumers "total access" - access to any information a
commercial Web site may have about them. Under Option 2, consumer access
becomes a default rule; personal information would be made accessible to
consumers if the information were retrievable in the ordinary course of
business. Option 3 takes the access decision case-by-case; and would not
create a presumption for or against access but would take into account a
variety of factors, including industry sector, the content, the data
holder, the source, and the likely use of the information. The narrowest
option, Option 4, entitled "access for correction," would provide access
only to information that is used by the commercial Web site to grant or
deny a significant benefit to the consumer, and then only if access is
likely to produce an improvement in the accuracy of the information that
justifies the costs.

Finally, this section turns to an issue that links access and security
-- authentication. How does a Web site know it is providing access to
the right person? Giving access to the wrong person could turn a privacy
policy into an anti-privacy policy. The final section of this report
examines the difficulties and possible solutions inherent in trying to
authenticate requests for access to personal data.

## What is Access?

Commercial Web sites and their customers often have a common interest in
making sure that customers are aware of the information that the Web
site has collected about the consumer. To take one example, think of a
Web site that receives an order from a new customer and within 24 hours
is ready to ship. It is only prudent for the Web site to give the
customer access to the shipping information, perhaps sending an email to
say, "This is what we think you ordered and this is where we think you
want it shipped." Both consumer and Web site have an interest in the
accuracy that information, and sharing it with the consumer is a useful
check on errors or fraud in the order process. The same interest in
preventing errors may lead commercial Web sites to provide their
customers with access to a wide variety of other personal information
that the Web site has maintained about the customer. Similarly, banks
and consumers both benefit from the transmission of detailed credit card
statements each month. Among other things, providing an opportunity to
review each transaction protects both parties against fraud.

While there is broad agreement on this point, the issue of consumer
access to personal information does not lend itself to consensus. For
some, exceptions from the principle of access should be rare and narrow.
They view access as a broad principle ensuring accountability and
building trust. For others, it is the access principle itself that
should be interpreted narrowly. They contend that the costs of access --
in money, convenience, and privacy risks -- are often too high, for
businesses and consumers alike.

This report cannot bridge the range of strong and honest opinions across
the Committee about how and when Web sites should provide access to
personal information. What it can do, and what we hope it does do, is
illuminate ways of thinking about and talking about access so that even
those who disagree profoundly can communicate in a common tongue.

With that in mind, the Committee first turned to the question of
defining access. What do we mean when we say that a consumer will have
"access" to personal information in the hands of a commercial Web site?
This question leads in turn to several different questions about how
access may be defined.

**Type of Access.** The first way of measuring access is to focus on the
type of consumer access, which can be quite varied. The terms used by
the Committee to convey the type of access included "view," "edit," and
"delete" access. If "view" access is provided, consumers would be able
to view or obtain a copy of the information. "Edit" access, in contrast,
would allow consumers to correct, amend, challenge, or dispute
information. (There are, of course, significant practical differences
for both consumers and Web sites between allowing correction of data and
allowing challenges to the data.) Finally, "delete" access would allow
consumers to insist that particular information be removed from their
file.

The Committee did not agree on a single appropriate type of access for
every situation. Instead, the type of access may vary between each
access option put forth in following sections. The proper type of access
will also be influenced by other considerations such as whether the Web
site in question is the original source of the data and what kind of
authentication the consumer supplies in order to obtain access.

**Means of Access.** Access can also be provided through a variety of
means. For example, information can be provided online, over the
telephone, through the mail, or in person. In addition, information can
be provided at the consumer's request, at regular intervals, in response
to a specific event, or on some other schedule. Determining the most
appropriate means of providing access is best done with due
consideration to the usability for consumers, the authentication
necessary to limit unauthorized access, the cost to businesses and
consumers, and the security requirements surrounding the data.

**Ease of access.** Ease of access will also vary depending on the
circumstances. It will be influenced by how "usable" the access system
may be for those without technical training, the form in which the
information is presented, the availability of the access system, and the
notice by which consumers are made aware of what information is
available and how to access and correct this information. Easy to use
access will be more meaningful to consumers. The cost of providing easy
to use access systems is likewise a consideration. These costs may
include the cost of creating and maintaining new or special capabilities
to provide access, adding customer service staff to handle customer
requests, additional security systems, and other costs.

## What is Personal Information?

Defining the term personal information is central to the task of
considering various options for providing access. Over the course of its
meetings and deliberations, the Committee discussed various approaches
to defining the information that is made available for individuals to
access. The discussion below examines several factors to be considered
in defining the information available for access. Defining personal
information is one factor in determining what data will be accessible to
individuals. The scope of access will be further influenced by the
access option chosen (section 2.5) and decisions about the appropriate
points and means of access discussed below.

**"Fit"\-- purely v. imperfectly personal data.** Information is linked
to individuals in various ways. Data can be tightly tied to a specific
individual's name, address, and birth date. Data can be tied to a device
such as the individual's telephone, browser, or computer in which case
it may reflect the individual's activities and the activities of others
who use the device. In such instances we are left with data that is both
personal to an individual but perhaps not unique to the individual. The
data collected in both cases may be used for nearly identical purposes,
despite differences in its specificity. For example, information about
an individual's use of a credit card may be used to determine the
advertising inserts placed in their monthly billing statement, just as
information about the actions of a computer browser may be used to
determine the advertising placed on the next page the browser visits.
Committee members expressed different opinions as to whether the
definition of personal information should include imperfectly personal
data in addition to purely personal data.

**The medium of collection: online v. offline.** Information is
collected from individuals through a variety of mediums. In both the
"brick and mortar" and "click and mortar" worlds data is gathered from
individuals through a variety of means. Members of the Committee
expressed different opinions as to whether the scope of access should be
limited to data collected online or should include all data regardless
of what collection medium was used.

**The source of collection: individual v. third parties.** Information
about an individual can be collected directly from the individual or
from third parties. A business may purchase information about its
existing customers from another business or it can purchase a list
containing information about individuals it would like to attract as
customers, such as a mailing list. Similarly, a business may purchase
census or other overlay data to enhance the information that it has
collected about its own customers. Committee members expressed different
opinions as to whether the scope of access should include all data
regardless of its source or should be limited to data collected directly
from the individual.

**The method of collection: passive v. active.** Information is
collected from individuals actively and passively. Information is
actively solicited from the individual through the use of surveys,
registration forms, and other solicitations. At other times data is
gathered without the individual's explicit cooperation as in the
collection of click stream data. This is commonly referred to as passive
collection because the individual is not actively providing information.
Passive collection is akin to monitoring. Members of the Committee
expressed different opinions as to whether the scope of access should
include all data collected or be limited to actively collected data.

**The type of data: factual v. inferred and derived data.** Inferred or
derived data is information that the business has not "collected" either
passively or actively about the individual, but rather has inferred from
observed behavior. It includes the assumptions or conclusions that a
business makes about an individual, not the factual record of the
individual's action or behavior. In this discussion, we have drawn a
distinction between inferred data, which is based on information about a
sample population, and derived data, which is based on information
gathered from or about the individual subject.

Committee members expressed different opinions as to whether the scope
of access should include inferred and derived data or be limited to
factual data. Advocates of providing access to inferred and derived data
argue that it is used to make decisions about individuals and should
therefore be available to individuals. Critics of providing access to
such data argue that disclosing the assumptions a business makes about
customers may both invite competitors to discover proprietary
information and chill communications, such as candid opinions expressed
about consumers by third parties or employees.

## Who Provides Access? The Third-Party Issue

Even after access has been defined, questions remain. In particular, who
is to provide access to personal information?

Information is mobile, especially on the Web. This is true for personal
information as well. Take our order-fulfilling Web site from the last
section. There may have been a time when businesses all had their own
shipping departments, perhaps even their own delivery vans. Those days
are mostly gone; the shipping information supplied by our Web site may
have come from and gone to several third parties -- such as credit card
processors, fulfillment houses, and overnight delivery firms.

How should the access principle take account of the movement of
information from and to third parties? We identified three areas of
particular salience. First, we dealt with the question of whether and
how third parties should provide access. Second, we examined the
centralization risk associated with expanding the access obligation to
corporate affiliates. And third, we dealt with the question of providing
"edit" access to information supplied by third parties.

**Upstream and Downstream Parties.** If a Web site says that it provides
access to personal information, the Web site itself is plainly covered
by that promise. But should the assurance also bind third parties?

There are at least two kinds of third parties involved in the access
equation. These may be characterized as \*upstream" third parties and
"downstream" third parties. Upstream third parties are suppliers of
information used by the Web site. Downstream third parties receive
information from the Web site. (We will consider a third category in a
minute).

Upstream information is often purchased. A business may purchase
information about its existing customers (a credit report, for example)
or it may purchase information about individuals it would like to
attract as customers (a mailing list, for example). Similarly, a
business may purchase census or other overlay data to enhance the
information that it has collected about its own customers. As discussed
above, Committee members expressed different opinions about whether and
how to provide access to such upstream information.

Even if consumers receive access only to information gathered by the Web
site, there remains the question of what to do about downstream third
parties. Again, Committee members expressed different opinions about the
extent to which those third parties should be expected to provide
access.

The Committee generally agreed that corporations should provide access
to the data held by their agents in gathering or using the information
(such as the fulfillment house in our Web sale example). However, beyond
that point, opinion divided. Some members of the Committee thought that
providing access to information in the hands of downstream third parties
was unworkable and should not be attempted. Some argued that consumers
could be protected if instead of access the Web site provided notice
about all its information sharing. Others held that providing notice was
unduly burdensome to consumers who will be less likely to be aware of
the existence of such third parties, let alone how to contact those
companies and exercise access. Still other members of the Committee
believed that downstream parties should provide full access, although
the type of access may vary in particular circumstances.

**Corporate Affiliates and the Risks of Centralization.** The Committee
recognizes that many companies that hold personal information are made
up of a 'family' of businesses, each with a business (and therefore a
data-driven) relationship with customers. Some Committee members believe
that access should be granted across the corporate lines of affiliated
companies, even if the information has not been directly traded from one
entity to the other. This might be called the problem of "side-stream"
third parties. In this context, concerns were raised that an obligation
to provide consumer access across corporate lines might compel companies
to create databases that gather all information into large central
structures. Combining and centralizing previously separated databases
might pose an increased threat to personal privacy.

Centralizing and linking personal information is not a purpose of the
access principle. Opponents of the most expansive interpretation of
access argued that access should not be expanded to the point where it
encouraged the creation of a new file or record on an individual.

In response, it was noted that companies could provide central points to
serve consumers access requests without actually centralizing the
maintenance or storage of data can accommodate this. For example, parent
companies could create a single point of access for consumer access
requests, which would either transmit the requests to affiliates or
provide information that would allow consumers to identify and make
requests directly to the affiliates. Some questioned the workability of
even this approach, saying that such a central point may be difficult to
manage for companies that regularly acquire and divest subsidiaries.

The Committee recognizes a second concern about providing a single point
of access to all affiliates' information. It may increase the
vulnerability of an individual's information to compromise -- e.g., if
bad actors can guess the password, they can get access to private
information from one convenient location. Such a decision therefore must
be accompanied by a risk assessment and installation of appropriate
authentication and security.

**Third Parties and "Edit" Access.** "Edit" access poses special
problems in the context of third parties. Suppose that a Web site
obtains information about a customer from a third party, adds it to its
files, and shares the information with a downstream advertiser as well.
Then suppose that the customer wishes to challenge or modify the data.
Should the Web site simply make a note in its files or should it do
something about the upstream and downstream third parties? There are
many issues in this scenario, and we reached no conclusions. It
recognized the desirability of correcting errors up and down the data
stream. It also recognized that no company could know for sure where the
data may have gone once it left the company's control. Some Committee
members took the view that requests for "edit" access should always be
directed to the authoritative source. For example, if the information is
from a public source, a fair credit reporting agency, or other entity
that is identified as the authoritative source of the data., then any
efforts to challenge or correct the information should be directed to
that source and not to downstream recipients of the data.

## Cost of Access

We discussed whether businesses should charge consumers for access. The
possibilities discussed ranged from never charging a fee to always
charging a fee. Businesses might charge a nominal fee commensurate with
the type of data being accessed, the use of data being accessed, or the
amount of data being accessed. The fee might also be based on the
frequency of a user's access requests, or the nature of the access
requests, for example a request for real time access might incur a fee
where a request for delayed access might be free. Alternatively, the
service provider could be free to charge any reasonable fee within
specified limits.

Charging a fee would allow businesses to recover at least some of the
cost of providing access and would provide a means to shift the cost of
providing access to those consumers who use access rather than passing
it on to all consumers indirectly through higher prices. Experience
suggests that many if not most consumers never seek access to their
personal data. Fees might also provide a deterrent to frequent, nuisance
or harassing access requests.

Fees may limit the ability of consumers to access their information or
lessen the attractiveness of accessing personal information. There was a
wide range of opinion about when, if ever, an access fee should be
charged. Some members of the Committee have argued there never be a
charge to for reasonable access. Others thought any fee would be
inappropriate where an adverse decision was based upon the information
being accessed, but supported nominal fees, not greater than cost, in
other cases. Still others contended that it was necessary to charge some
fee to reflect what could be substantial access costs and to discourage
frivolous (or even fraudulent) requests.

## Access Options

The broadest option, Option 1, would give consumers "total access" -
access to any information a commercial Web site may have about them.
Under Option 2, consumer access becomes a default rule; personal
information would be made accessible to consumers if the information
were retrievable in the ordinary course of business. Option 3 takes the
access decision case-by-case; and would not create a presumption for or
against access but would take into account a variety of factors,
including industry sector, the content, the data holder, the source, and
the likely use of the information. The narrowest option, Option 4,
entitled "access for correction," would provide access only to
information that is used by the commercial Web site to grant or deny a
significant benefit to the consumer, and then only if access is likely
to produce an improvement in the accuracy of the information that
justifies the costs.

### Access Option 1: Total Access Approach

**Commercial Web sites should provide access to all personal information
regardless of medium, method, or source of collection, or the type of
data in question.**

The "total access" option works from the presumption that consumers
would benefit from having access to all their information in the
possession of commercial Web sites. Under this option, no personal
information would remain off-limits or confidential. Not only does this
verify the accuracy of that data, it also places the consumer in the
position of knowing how his or her personal information is collected and
used. In keeping with the purpose of providing consumers as much access
as possible, businesses would provide initial access for free, while
charging for repetitive access requests or terminating access upon
unduly repetitive access requests.

The "total access" option would be interpreted to only apply to existing
records. For example, off-line information possessed by a data collector
but not yet linked or joined with online information would not be
subject to access. In addition, creating more comprehensive records of
individuals would not be done under the guise of establishing "total
access\". Such action could centralize even more personal information
and that could pose a threat to personal privacy.

**Proponents would argue:**

1.  By providing greater access rights, businesses could increase the
    reliability and accuracy of data, could build consumer confidence
    and trust, could experience a public relations benefit, could make
    better decisions based on better data, could expand markets by
    giving consumers greater confidence in online privacy, and could
    experience greater efficiencies if they limit information collection
    to only what is necessary.

2.  Consumers might experience an enriched understanding of data
    collection practices, increased confidence in the online
    environment, more control over the accuracy of personal information,
    the ability to identify inaccurate data before it harms them, the
    ability to make better privacy decisions in the marketplace
    (including decisions to protect anonymity), and the ability to
    better police businesses for compliance with any stated policies.

3.  This option presents uniformity and predictability for both
    businesses and consumers. Businesses would know what scope of access
    to provide from the outset of their operations (which would allow
    companies to avoid much of the set-up cost associated with this
    option). Consumers would have an easy-to-understand expectation of
    access.

**Opponents would argue:**

1.  For businesses, this approach would lead to a substantial increase
    in costs, including: any required modifications or new design
    requirements placed on existing systems, new storage costs, new
    personnel costs, new legal costs and losses due to the disclosure of
    internal practices and proprietary information and affect the
    confidentiality of procedures companies use to make decisions and
    assumptions about user data.

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4.  Consumers would also experience additional costs, such as: pass
    through costs for system upgrades, new personnel and potential
    opportunity costs of businesses not investing in new products.

5.  Both businesses and consumers could be harmed by unauthorized access
    to a greater amount of information. Businesses may face a higher
    liability in this case and consumers may be risking more of their
    privacy.

### Access Option 2: Default to Consumer Access

**Commercial Web sites should provide access to personal information
that is retrievable in the ordinary course of business except in the
narrow instance where it places an unreasonable burden on the Web
site.**

The "default to consumer access" approach works from the presumption
that consumers should have access to their personal information. The
presumption of access is limited where considerations such as the
privacy of another individual, the proprietary nature of certain
information, or the cost of providing access outweighs the individual's
interest in access. This approach is consistent with U.S. Federal
statutes that provide access and correction, but may limit them due to
other considerations.

This approach recognizes that consumer access to personal information
serves multiple purposes, including but not limited to ensuring
accuracy. This approach seeks to promote openness and consumer awareness
in the belief that they aid oversight and compliance and promote greater
trust between businesses and their customers. Openness and awareness may
increase consumer demand for limited data collection and encourage
privacy-sensitive business practices.

There are exceptions to the "default to consumer access" approach. Under
this option, information is not accessible to a consumer unless it can
be retrieved by taking steps that are taken on a regular basis in the
business with respect to that information, or steps that the
organization is capable of taking with the procedures it uses on a
regular basis. This limitation on access is designed to ensure that
businesses need not create new and more elaborate databases solely to
provide access. The creation of new databases of this sort would create
additional risks to privacy. However, limiting access in this fashion
means that some personal information may be out of reach under this
option.

In addition, under this option, personal information is not retrievable
in the ordinary course of business if retrieval would impose an
"unreasonable burden" on the business. This is a narrow, but important,
exception to access. It allows for a purpose or cost-benefit analysis in
those situations where the ability to retrieve the information would be
very costly or disruptive to the business --for example, where certain
proprietary data may be disclosed, or where the information at issue is
of marginal significance compared to the cost of access. It is here that
the sensitivity of data, the uses of data, the purpose of the request,
etc. could be considered. If an organization uses this exception to
limit access, it should refer the individual to the provisions in its
privacy notice that discuss its data collection use, and consent/choice
policies, or provide the individual with information equivalent to the
privacy notice.

**Proponents of this approach would argue:**

1.  This approach provides broad access rights and reasonably matches
    consumer expectations that they can access personal information
    collected about them.

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6.  Economic, proprietary, and other interests can be considered in
    decisions to limit access. However, these considerations occur
    within a framework that favors access ensuring that they will not be
    misused or expanded.

7.  It allows the growth of electronic commerce by recognizing that
    access need not be provided where it would be unreasonably
    burdensome due to cost or other considerations.

8.  It protects the competitive marketplace by ensuring that businesses
    can protect proprietary information. This provides a framework for
    access that also limits the potential for competitors to use access
    to gain knowledge about internal processes.

9.  The approach does not unduly force businesses to provide access to
    aggregations of data that it does not already possess -- the
    consumer is simply given a view to information about them that is
    commensurate with the view the business itself already possesses.

**Opponents of this approach would argue:**

1.  This approach is overly broad because it places a burden on
    businesses to justify limits on access where the consumer's need for
    access is unclear or uncompelling. Lots of data collected by Web
    sites cannot be corrected, because it is observed (such as
    clickstream data) or inferred or derived (assumptions and
    conclusions) that are not capable of correction per se. The
    presumption of access places a heavy burden on businesses in cases
    where the consumer interest in access is weak.

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10. This approach is overly broad because it assumes that promoting
    openness and awareness are appropriate reasons for Web sites to
    provide consumers with access. The cost of supporting access systems
    should only be borne by Web sites where correctable data is used to
    make decisions about consumers that have a substantial impact on
    their lives. Supporting access for the purpose of openness does not
    appropriately balance the costs and benefits.

11. This approach is overly restrictive. Because businesses would not be
    required to provide access unless personal information is
    "retrievable in the ordinary course of business," access rights
    could vary quite a bit from business to business, or across
    different types of businesses. Businesses may try to use nuances in
    the interpretation of "retrievable in the ordinary course of
    business" to avoid providing access. Potentially, a business could
    set up its data structures so that the data could be used to make
    decisions about consumers without being retrievable as a separate
    bit of information. Similarly, the proprietary exception may
    inappropriately limit access. Consumers have a significant interest
    in seeing derived or inferred data that is used to make decisions
    about them.

12. This approach is overly restrictive because the exceptions give
    businesses the ability to unilaterally deny consumers access and
    will lead to confusing and unpredictable results. Vesting businesses
    with the ability to deny access due to costs is inappropriate. Such
    determinations should be narrow and made through fair, open, and
    accountable processes. Although the rule may be very straightforward
    for the majority of situations, difficulties in determining whether
    or not a particular business falls within the exceptions would
    require businesses to become experts in this area. In this regard,
    the rule may make access unduly complex for businesses.

### Access Option 3: Case-by-Case Approach Including Sectoral Considerations

**Commercial Web sites should provide access depending on a variety of
considerations and the level of access may differ for different types of
information or in different sectors.**

A third approach would be to treat different information differently
depending on a calculation that takes into consideration, among other
things, the content of the information, the holder of the information,
the source of the information, and the likely use of the information.
This approach is necessarily more complex, recognizing that whether
access is appropriate depends on a variety of factors. Different
sectors, record-keeping systems, and types of data raise different
issues. The challenge, therefore, would be to develop an easy to
administer set of rules.

Unlike the Default option that is premised on a presumption of access,
under this approach there is no presumption for or against access.
Rather, the access inquiry requires an analysis of the relevant factors.
This determination will depend both upon the nature of the data in
question (e.g., information regarding children) and the record-keeping
system in question. On the other hand, it is clear that under this third
approach, there would be categories of data to which access is more
limited than in the other approaches. For example, inferred data,
\"non-factual data\" or internal identifiers may be less accessible
under this approach than under the other approaches. This approach
affords access to information that is likely to have an adverse effect
on the person.

This option supports access for a variety purposes, including but not
limited to promoting consumer awareness. Access itself may not only
enhance \"consumer privacy\" per se, but also ensure the accuracy of
data and protect against adverse decisions based upon incorrect data.

Applying this approach, in some instances access may be limited for
purposes of correction of erroneous data. This approach also may allow a
more precise weighing, in light of the nature of the data and the sector
involved, the consumer\'s reasonable expectations about the data, and
the costs of providing access, of whether access to the particular type
of data is warranted. As with all options, the cost of providing access
is a consideration that must be factored into the analysis. As the
purpose for the data use becomes more significant, however, cost may
become less of a factor.

U.S. privacy laws have developed as the result of a sector-by-sector
approach similar to this option. This approach could also result in
classes or categories of data receiving similar treatment across various
sectors. This approach considers data privacy in the context of specific
types of information or sectors and whether it is likely to be used in a
way that could adversely affect the data subject. For example, access as
the ability to view and correct is the norm with regard to financial
information used to make credit granting and employment decisions under
the Fair Credit Reporting Act. Several laws provide for access and
correction. These include the Family Education Rights and Privacy Act
(20 USC 1232) which allows students the ability to view, dispute, and
delete parts of student records. The Cable Communications Policy Act (47
USC 551) interprets access as the ability to view and correct. The U.S.
Privacy Protection Study Commission, also addressed access issues in the
mid-1970s.

The Commission recommended access and correction as a component of fair
information practices. They recognized that decisions about when and how
to provide access to information are unique to the particular
information systems or sectors.

This approach would provide different access possibilities to different
sectors or types of data. Depending on the number of factors in the
calculation, the permutations could be extensive. This approach could
afford access to all sensitive data such as financial information,
health information, or information relating to children, and other data
in sectors of the economy that may affect individuals in a materially
adverse way if it is inaccurate. In these instances, it would yield the
same result as the Default Rule and Total Access approaches.

**Proponents would argue:**

1.  The approach affords greater flexibility than the other options.

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1.  By considering each type of data and industry sector on its merits,
    the approach may more accurately balance factors bearing on whether
    to provide access.

2.  This approach may more realistically address the expectations of
    both consumers and businesses. Consumers tend to be interested in
    obtaining access to information that make a material difference in
    their lives. Where the information does not make a difference,
    consumers appear to be less interested in obtaining access.

3.  In circumstances in which consumer access fees do not fully cover
    the costs of providing access, this approach would reduce costs to
    consumers, and more fairly apportion costs of access. Specifically,
    it would avoid the problem under a broad-based approach encouraging
    access to most data of forcing consumers uninterested in obtaining
    access to bear the costs of creating the access infrastructure.

**Opponents would argue:**

1.  The approach may involve far too many factors to allow a
    comprehensible set of rules to emerge. Moreover, many of the
    factors, e.g., sensitivity, are difficult to assess objectively.

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4.  The complexity of this approach may yield inconsistent results if
    different decision makers are assessing issues such as sensitivity.
    This inconsistency may lead to consumer confusion.

5.  This approach may not take into consideration that for some
    consumers, the predominant interest of access is to know what
    information is \"out there\" about them.

6.  Consumers may not agree that any information maintained about them
    does not warrant access on the basis of someone else's perception of
    the sensitivity of the data.

### Access Option 4: Access for Correction

**Commercial Web sites should provide a consumer with access to personal
information if (1) the information is used to grant or deny the consumer
a significant benefit and (2) providing access will improve the accuracy
of the data in a way that justifies the cost.**

This option begins by asking why access to personal data is important to
consumers. One reason for allowing access -- correcting errors -- is of
interest to both the individual and to the Web site. If the Web site
uses personal data to grant or deny some significant benefit to
consumers, then errors in the Web site's files could cause real harm to
the consumer. Giving the consumer access to the data allows the consumer
to challenge or correct errors. Both the consumer and the Web site have
an interest in the accuracy of such data, so allowing access and
correction helps both parties. Thus, even if allowing access increases
the Web site's costs, as it often will, and even if the costs cannot be
passed on to consumers, the Web site itself will get some benefit from
access designed to improve the accuracy of important data.

This option treats error-correction as the principal reason for
incurring the costs of providing access. It gives little weight to other
justifications that have been advanced for access, such as the view that
giving consumers access to the files maintained about them will
discourage Web sites from gathering sensitive or unnecessary
information.

Maintaining an access system imposes costs on Web sites and their
customers -- not just in money but also in convenience and even risks to
privacy.

The "access for correction" option seeks to minimize those costs while
preserving the error-correction rationale that it treats as the
touchstone for defining reasonable access.

Under this option, a Web site would grant access to personal data in its
files only after answering two questions in the affirmative: (1) Does
the Web site use personal data to grant or deny significant benefits to
an individual? (2) Will granting access improve the accuracy of the data
in a way that justifies the costs?

The first question resolves many of the issues that are more difficult
to resolve under the other options presented here. Examples of
information that is used to grant or deny significant benefits include
credit reports, financial qualifications, and medical records. In
contrast, information used for marketing purposes, such as targeted ads
or direct mail, does not confer or deny a significant benefit. By
focusing on whether the Web site uses personal data to grant or deny a
significant benefit, the approach would largely exclude personal data
that is not tied closely to an individual, because it is unlikely
(though not impossible) that significant benefits will be granted
anonymously. Similarly, the approach calls for access only to
information that is collected and retrieved in the ordinary course of
business. With some qualifications set out below, however, the approach
would allow access to information that has been provided by a third
party, as long as the information is used to grant or deny significant
benefits.

The second question -- whether allowing access to correct errors
justifies the cost -- raises a variety of possible exceptions to access.
Inferred data, such as judgments made about the consumer by third
parties or Web site employees or even expert information systems, are
not usually susceptible to direct correction, although obviously the
underlying data used to generate the inference can be corrected. The
option takes account of costs that are not simply financial. Thus,
access is not ordinarily justified if it would reveal trade secrets. Nor
is it justified if it would compromise expectations of confidentiality
on the part of third parties or Web site employees (e.g., comments by
the Web site's "help desk" employees on the civility or IQ of particular
customers). Under this option, as the likelihood of improving the
accuracy of personal data declines and the cost of providing secure
access increases, the cost-effectiveness of access also declines and the
public-policy justification for access grows weaker.

**Proponents of this option would argue:**

1.  The most obvious goal served by allowing access to personal data is
    correction of erroneous data that may be used to make important
    decisions about an individual. The access principle has often been
    implemented in contexts where correction of data is essential --
    such as credit reports and other instances where errors have a
    direct impact on the individual and where those errors can be
    reduced by allowing access.

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13. The other goals advanced for access \-- education, accountability,
    consciousness-raising \-- are better served by consumer notice
    instead of an expensive and little-used access system. These reasons
    for access do not justify the costs of providing access, which
    include not just time and expense but in some circumstances a very
    real risk to privacy if access itself results in the compromise of
    personal data. Rather than pay those costs and take those risks for
    a large body of mostly insignificant data, we should concentrate on
    providing access to data that is important and correctable.

14. There is no compelling reason to provide access to uncorrectable
    data, unless the real goal is to raise the cost of maintaining
    personal data so high that Web sites just give up and stop gathering
    the information. Those who want to restrict information gathering
    should argue for that goal explicitly and not try to achieve the
    goal indirectly through unnecessarily broadening the access
    principle.

**Opponents of this option would argue:**

1.  Access serves broader purposes of openness, accountability, and
    fairness. This option reduces the principle of access to a single
    purpose -- correction of errors. Sometimes data may not be
    correctable but may be used in inappropriate or unfair ways with
    significant impact on the individual.

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15. Access is necessary for informed consumer choice. Only broad access
    will create the kind of accountability that is required among Web
    sites. Once consumers truly know what Web sites are collecting about
    them, they will force those sites to adopt responsible data
    collection policies.

16. Industry should bear the costs of handling data responsibly. If the
    cost of providing access outweighs the value of the information to a
    Web site, the site should revisit its' information-gathering
    practices. Cost benefit analyses of this type are good for privacy
    and for businesses. Just as industries that can't afford new
    pollution controls close their old factories, businesses that are
    incapable of handling information responsibly should close their
    doors.

## Authentication

This Committee was asked to consider not just access to personal
information but also security for personal information. This combined
mandate was an appropriate one, for there is a very real tension between
access and security, one that we address in this section.

Unlike the other Fair Information Practice principles, the access
principle sometimes pits privacy against privacy. Simply stated, the
problem is this \-- On the one hand, privacy could be enhanced if
consumers can freely access the information that commercial Web sites
have gathered about them. On the other hand, privacy is lost if a
security failure results in access being granted to the wrong person --
an investigator making a pretext call, a con man engaged in identity
theft, or, in some instances, one family member in conflict with
another.

How can consumers get the benefits of access to their personal data
without running the risk that others will also gain access to that data?
The answer is to employ techniques that adequately authenticate
consumers -- that provide some proof of that the consumer is authorized
to have access to the personal data. As more and more of our personal
information is stored on the Web, like stock portfolios and financial
accounts, the need for good online authentication grows ever stronger,
and new solutions continue to arrive in the market.

But authentication often involves making tradeoffs between security and
ease of access. How should those tradeoffs be made in the context of an
access policy? In particular, what kind of authentication techniques
should a commercial Web site employ to limit inappropriate access to
personal information?

If the consumer must produce three picture IDs, privacy will be
protected, but access will be difficult. If an email address is treated
as sufficient, access will be encouraged, but the risk of compromise
will grow. This section of our report attempts to illustrate the ways in
which these competing interests can be addressed. In the end, it will be
clear that there is no single answer to the dilemma described above.

As with many of the access issues discussed in this report, the proper
level of authentication depends on the circumstances. To take one
example, the level of authentication depends in part upon whether the
consumer will simply view the information or will correct or amend it as
well. Allowing the wrong individual to view someone else's data is a
violation of privacy -- and may lead to additional harm ranging from
embarrassment to loss of employment -- but allowing the wrong person to
"correct" that personal information can result in equally devastating
consequences. For example, in the past, criminals have gained access to
an individual's credit card accounts by filling out a change of address
card with the post office and diverting the individual's credit card
statements to another location. With access to the individual's bank
statements and credit card bills, the crook has ample information to
impersonate the victim. For this reason, where correction or amendment
is provided, an audit trail should, if practicable, be maintained to aid
in identifying potential problems.

In judging the proper level of authentication, it is necessary to bear
in mind that the risk of liability will heavily influence the Web site's
choices. Sooner or later, whatever level is set, the Web site's
authentication requirements will turn out to be either too strict or not
strict enough. A business runs a risk of liability if it allows the
wrong person to access personal information. Although it is not clear
what specific remedy an individual might have under existing law, the
lack of certainty regarding liability presents a problem for both
individuals and businesses. If the liability standard imposed upon
business is too strict, businesses could raise the barrier to access
very high, burdening individuals' access in an effort to avoid
liability. Conversely, if existing legal remedies do not provide
sufficient penalties for inappropriate access, individuals' privacy may
suffer. How to strike an appropriate balance that spurs good practices,
encourages the deployment of robust authentication devices, and does not
overly burden access is the challenge at hand.

We noted that efforts to provide consumer access could lead to
authentication measures that could erode the advantages of anonymity on
the Internet. Authentication can support access whether the consumer
chooses to be anonymous, pseudonymous, or known. So, authentication does
not require consumers to provide personally identifiable information.
But as a practical matter the conflict is often direct. For example,
technologies such as biometrics may improve authentication but they may
inevitably reduce the consumer's ability to remain anonymous.

Similarly, access processes that rely on data held by a third party to
authenticate a consumer may increase the proliferation of personal data,
bringing into question the privacy policies of third party
authentication services. At the same time, third parties --
intermediaries -- can also play a role in the protection of identity.
Currently, several intermediary companies provide anonymity or
pseudonymity to individuals on the Internet.

### Ways of addressing the authentication problem

So, how can Web sites choose an authentication policy? There is no one
right answer. In this section we look at two case studies to identify
ways in which commercial Web sites might strike a balance in addressing
the authentication problem. Often, the solutions chosen will depend on
the Web site's relationship with the consumer, as well as the kind of
data to which access is provided.

**Account Subscribers.** Perhaps the fewest difficulties arise where a
subscriber establishes an account with a Web site. In many cases, the
individual may be given access to information about his or her account
if he or she simply provided only the information required to establish
and secure the account. But relying on information such as name, address
and phone number to authenticate the identity and authorization of an
account holder is risky because the information is so widely available.
In fact, many of the most common "shared secrets" (such as social
security numbers or mother's maiden name) have been so widely shared
that it is hard to call them secrets any more.

For this reason, it is common practice both offline and online to
require some additional piece of information that is thought to be more
difficult to compromise. Many businesses require individuals to use a
shared secret (password) to access an account.

Even a password requirement, with all its inconveniences and costs,
suffers from serious security flaws. Many consumers use the same
password at multiple places, or leave themselves reminders on yellow
stickies, or use obvious passwords that are easily guessed, for example,
one of the most commonly used passwords of all -"password". All of these
risks can compromise the integrity of the authentication system.
Authenticating identity has become a far more complex endeavor than it
once was.

Even when an account already requires a password, it may be appropriate
to require something more than the password before allowing access. This
could be a physical object (something the consumer owns), or some unique
physical attribute (e.g. some a biometric characteristic), or
information passed to the consumer in a separate channel, such as a
special code provided with the customer's last statement or information
about recent account activity.

We discussed the feasibility of using authentication devices as a method
for obtaining consumer access to personal data. Some Committee members
expressed concern that "near perfect" authentication tools may be
prohibitively expensive or too cumbersome for widespread use. Others
said that wide ranges of authentication solutions are available today
that solve the password \'problem\' described above. They pointed to
hardware tokens that may be used like an ATM card and software tokens
that can be downloaded to a PC, PDA or cell phone. Doubters on the
Committee argued that such solutions remain costly and that the risks of
misuse and misappropriation remain.

**Subscriber Access -- An Authentication Case Study**

A subscriber opens an email account with a free mail service.
Establishing the email account does not require the subscriber to
disclose personal information. The subscriber is assigned an email
address and asked to establish a password to protect the account. If the
subscriber requests access to personal information held by the service,
how should the service determine whether to authorize access? What level
of authentication should be required?

**Options:**

**a. Require the same information for access (account name and
password)**. This approach errs on the side of ease of use for the
account holder. But in doing so it relies upon one token (account name)
that is frequently shared with others (email address for example) and
another token (password) which is (as our discussions indicate)
relatively easy to compromise.

**b. Require account name, password, and some additional information
(e.g., IP address).** This approach provides additional protection
against the compromise of the account password.

**c. Require account name, password, and some dynamic information (e.g.,
information about recent account activity).** This method adds some
protection against unauthorized access. By asking for information that
is dynamic and therefore less likely to be permanently compromised, it
adds some additional protection.

**d. Require any of the above sets of information and send the requested
information to the account.**

**e. Require account name and password in order to trigger the sending
of a one-time access code through a separate communication channel.**
The code would be used to gain access to the personal information. This
approach would build in an additional precaution against unauthorized
use. By requiring the request to come from the account (similar to
credit card authorization that must come from the registered phone of
the account holder) and returning a one-time access key to the account
the system could further limit unauthorized access. This feature might
cause a minor delay, but it does not require the individual to remember
additional pieces of information.

**Cookies, identifiers, and partially personalized data**

A harder authentication problem arises if the Web site seeks to provide
access to data that is not tied to an individual subscriber's account.
Sometimes, data is gathered about the activities of a particular
computer, through the use of cookies or another unique identifier,. But
such data maybe only partially personalized \-- the computer may have
more than one user. The consequences of disclosing information about an
individual's use of a Web site or click stream data to another person
(family member, co-worker, other) could be damaging.

The Committee notes that this problem is not limited to the online
environment. Consumers are familiar with the problem in other contexts.
To take one example, a home telephone number is only "partially
personalized." It may be used by anyone who enters the house. Thus, an
itemized phone bill may reveal information about one family member to
another. For telephone billings, we accept over-disclosure - that is,
account holders may see information about other users of that phone. And
despite nearly a century of experience with telephones and telephone
billing, new privacy issues continue to arise in this context (e.g.,
disclosure of use of 900 numbers). Based on this experience, the problem
of partially personalized information will remain a thorny one for the
foreseeable future.

In such circumstances, how can a service authenticate that the
individual is the person to whom the data relates? Can Web sites provide
access in a fashion that reflects the potential adverse consequences of
disclosing information to someone other than the subject of that
information? Should the level of access authorized be lowered due to the
complexities of connecting the user to the data? Are there other
policies that would address the privacy interest and have a lower risk
of unintentionally disclosing data to the wrong individual? Does this
concern vary from Web site to Web site?

Again, there is no single answer to these questions, as our case study
shows.

**Cookies -- An Authentication Case Study**

A Web site assigns each visitor a unique identifier -- a cookie -- that
is used to track and retain data about the visitor's activities at the
site. The Web site does not request or gather information about specific
visitor's identities. A visitor requests access to information that the
Web site has about her use of the site. How should the Web site proceed?

**Options:**

**a. Require only the identifier (the cookie).** This would make it
quite easy for the user to get access to personal data; but if the
identifier is tied to an imperfect proxy for the individual (such as a
computer) it is possible that other individuals may gain access to the
individual's personal information. For this reason, the identifier alone
may be insufficient to grant access, particularly when the information
may be sensitive (visits to disease-specific medical sites, for
example). Require the individual to open an account and allow access to
data collected from this point forward. This certainly sounds more
secure, but it may not limit inappropriate access. For example, if the
account is browser-based and there are several individuals who use the
browser, unless special precautions are taken, this option could allow
one individual to access all the data and prevent the others from
accessing any.

**b. Require the identifier but limit the scope of access.** This option
acknowledges the risk of inappropriate access and it seeks to mitigate
the harm by limiting the information provided. For example, a Web site
could provide categories of information it has collected rather than the
actual information. (Note that at this point the Web site is providing
something more like notice than access.).

**c. Delete or disassociate the data from the requester's identifier**
This option provides something other than access. Where the data is
maintained in the aggregate, this option recognizes the site's
commercial interest in utilizing the data. Where deletion is provided,
it protects the consumer's general interest in their privacy.

**d. Require no identifier but provide only a general description of the
kinds of data collected.** This solution also provides notice rather
than access. In response to an access request, it provides notice of the
kinds of data that the site gathers.

# Security

We examined how to ensure the security of personal data held by
commercial Web sites. This section first describes competing
considerations in computer security. After then looking at some
possibilities for regulating computer security in online systems, it
discusses the importance of notice and education as supplements to
standards for protecting personal data. It presents competing options
for setting Web site security standards and recommends a specific
solution to protect the security of personal data.

## Competing Considerations in Computer Security

Most consumers -- and most companies -- would expect companies that
collect and hold personal data to provide some kind of security for that
data. Identifying the most effective and efficient solution for data
security is a difficult task. Security is application-specific and
process-specific. Different types of data warrant different levels of
protection.

Security -- and the resulting protection for personal data -- can be set
at almost any level depending on the costs one is willing to incur, not
only in dollars but in inconvenience for users and administrators of the
system. Security is contextual: to achieve appropriate security,
security professionals typically vary the level of protection based on
the value of the information on the systems, the cost of particular
security measures, the costs of a security failure in terms of both
liability and public confidence.

To complicate matters, both computer systems and methods of violating
computer security are evolving at a rapid clip, with the result that
computer security is more a *process* than a *state.* Security that was
adequate yesterday is inadequate today. Anyone who sets detailed
computer security standards -- whether for a company, an industry, or a
government body -- must be prepared to revisit and revise those
standards on a constant basis.

When companies address this problem, they should develop a program that
is a continuous life cycle designed to meet the needs of the particular
organization or industry. The cycle should begin with an assessment of
risk; the establishment and implementation of a security architecture
and management of policies and procedures based on the identified risk;
training programs; regular audit and continuous monitoring; and periodic
reassessment of risk. These essential elements can be designed to meet
the unique requirements of organizations regardless of size.

In our advice to the FTC, we attempt to reflect this understanding of
security. Our work, and this report, reflects the various types of
on-line commercial sites, and the fact that they have different security
needs, different resources, and different relationships with consumers.
The report reflects this understanding and seeks to identify the range
of different possibilities for balancing the sometimes-competing
considerations of security, cost, and privacy.

## Directing Computer Security -- Preliminary Considerations

Before turning to the options it is worthwhile to comment on several
issues that we considered but did not incorporate directly into its list
of options.

First, we considered whether guidelines or regulations on security
should contain some specific provision easing their application on
smaller, start-up companies or newcomers to the online environment, but
we ultimately determined that new entries should not receive special
treatment when it comes to security standards. In part, this is because
organizations that collect personal data have an obligation to protect
that data regardless of their size. In part, this is because we
concluded that any risk assessment conducted to evaluate security needs
should take into account the size of the company (or, more
appropriately, the size of a company's potential exposure to security
breaches). In many cases (but not all), a smaller Web site or less
well-established company will have fewer customers, less data to secure,
and less need for heavy security. A smaller site may also have an easier
time monitoring its exposure manually and informally. And of course,
even a small site may obtain security services by careful outsourcing.

Second, we noted that several of the proposed options depend on or would
be greatly advanced by inter-industry cooperation and consultation on
appropriate and feasible security standards. Often, there are
significant barriers to sharing information about adverse events,
including fears of antitrust actions and liability exposure. In the
past, the government's willingness to provide clarity on antitrust rules
to allow useful cooperation among firms has been helpful, and similar
guidance that will encourage industry members to cooperate in the
development or enforcement of security standards and procedures without
fear of antitrust liability will be helpful here.

Third, it is vital to keep in mind that companies need to protect
against internal as well as external threats when considering solutions
designed to secure customers\' personal data. Many companies have
already implemented information security policies that protect sensitive
corporate data (i.e., compensation information) by limiting access to
only those employees with a \"need to know.\" Companies need to
implement similar measures that protect customer data from unauthorized
access, modification or theft. At the same time, mandated internal
security measures can pose difficult issues. For example, it is not easy
to define "unauthorized" employee access; not every company has or needs
rules about which employees have authority over computer or other data
systems. And many companies that have such rules amend them simply by
changing their practices rather than rewriting the \"rule book.\" Even
more troubling is the possibility that internal security requirements
that are driven by a fear of liability could easily become draconian --
including background checks, drug testing, even polygraphs. We should
not without serious consideration encourage measures that improve the
privacy of consumers by reducing the privacy of employees.

Fourth, we are concerned about the risks of regulation based on a broad
definition of \"integrity.\" Some concepts of security -- and some legal
definitions -- call for network owners to preserve the \"integrity\" of
data. Data is typically defined as having integrity if it has not been
\"corrupted either maliciously or accidentally\" \[Computer Security
Basics (O\'Reilly & Associates, Inc., 1991)\] or has not been \"subject
to unauthorized or unexpected changes\" \[Issue Update on Information
Security and Privacy in Network Environments (Office of Technology
Assessment, 1995, US GPO)\]. These definitions, issued in the context of
computer security rather than legal enforcement, pose problems when
translated into a legal mandate. If integrity were read narrowly, as a
legal matter, it would focus on whether a Web site has some form of
protection against malicious corruption of its data by external or
internal sources. If the definition is read broadly, it could lead to
liability for data entry errors or other accidental distortions to the
private personal information it maintains.

Authentication and authorization controls for access to information are
integral parts of system security. To establish appropriate
authentication and authorization, businesses must consider the value of
the information on their systems to both themselves and the individuals
to whom it relates, the cost of particular security measures, the risk
of inside abuse and outside intrusion, and the cost of a security
failure in terms of both liability and public confidence. This
discussion of security pertains both to information in transition and
information in storage.

## Notice and Education

After considerable discussion, the Committee has developed a wide range
of possible options for setting standards for protecting personal data
held by commercial Web sites. Before presenting these options, we will
address two policy options that the group considered but determined were
unsatisfactory on their own. While insufficient standing alone, we
concluded that development of programs to educate consumers on security
issues and a requirement that companies post notice describing their
security measures are approaches that should be examined as possible
supplements to some of the options in the Security Options below.

### Notice

Notice is viewed as an appropriate tool for informing individuals about
the information practices of businesses. It is critical to the
consumer's ability to make informed choices in the marketplace about a
company's data practices. In the area of security, as in the area of
privacy, there is not necessarily meaningful correlation between the
presence or absence of a security notice statement and the true quality
of a Web site's actual security. A security notice could be more useful
if it allows consumers to compare security among sites in an
understandable way. Since it is difficult to convey any useful
information in a short statement dealing with a subject as complex as
the nuts and bolts of security, most such notices would be confusing and
convey little to the average consumer. Further, providing too many
technical details about security in a security notice could serve as an
invitation to hackers. As was discussed at some length by the Committee,
these considerations also mean that it is not possible to judge the
adequacy of security at Web sites by performing a "sweep" that focuses
on the presence or absence of notices.

Notice is important in triggering one of the few enforcement mechanisms
available under existing law. If a posted notice states a policy at
variance with the organization's practices, the FTC may exercise its
enforcement powers by finding the organization liable for deceptive
trade practices. But security notices are ineffective standing alone. At
the same time, we believe that they could be useful in conjunction with
one of the other options discussed in Section D. The form such notice
should take will vary depending upon the option selected.

### Consumer Education

In addition to notice, consumer education campaigns are also useful to
alert consumers about security issues, including how to assess the
security of a commercial site and the role of the consumer in assuring
good security. Regardless of what security solutions the FTC decides to
recommend, it would be extremely valuable for the FTC, industry
associations, state attorneys general, and others to sponsor consumer
education campaigns aimed at informing Internet users about what to look
for in evaluating a company's security. In addition, no system is secure
against the negligence of users, so consumers must be educated to take
steps on their own to protect the security of their personal data.

## Options for Setting Web site Security Standards

The Committee has identified two sets of options for those seeking to
set security standards. In essence, these options address two questions:
How should security standards be defined? And how should they be
enforced?

The question of how security standards should be defined requires
consideration of the parties responsible for the definition as well as
issues of the scope and degree of flexibility and changeability of the
standards. The entries that could be responsible for setting security
standards explicitly include government agencies, courts, and standards
bodies. Furthermore, it could be left up to Web sites themselves to
develop security programs (perhaps with a requirement that each site
develop some security program), or it could be left to market forces and
existing remedies to pressure Web sites into addressing security at an
appropriate level.

In this section, we set forth five options for setting security
standards that fall along a continuum from most laissez faire to most
regulatory. Each of the proposals reconciles the three goals of adequate
security, appropriate cost, and heightened protections for privacy in a
different manner. For each option, we have presented the arguments
deemed most persuasive by proponents and opponents of the option.

### Security Option 1: Rely on Existing Remedies

Before requiring any particular security steps, wait to see whether
existing negligence law, state attorneys general, and the pressure of
the market induce Web sites that collect personal information to
generate their own security standards. It is worth noting that the
insurance industry has started to insure risks associated with Internet
security. The emergence of network security insurance may force
companies to seriously address security issues, as the presence or
absence of adequate security will be taken into account in the
underwriting process utilized to determine rates for premium.

**Proponents would argue:**

17. Consumers who suffer harm as the result of negligence can typically
    bring tort actions. There is no reason to think that consumers who
    are harmed by a breach would lack a remedy for any specific injury
    they may suffer.

18. Damages are often quantifiable (e.g., credit card charges or lost
    work time due to identity theft). And even when they are not
    quantifiable (disclosure of embarrassing medical data, for example),
    the problem is no more difficult for juries to resolve than similar
    intangible wrongs routinely resolved by juries today (e.g., libel
    damages or "false light" claims).

19. It is therefore reasonable to wait for such litigation and to
    correct any gaps that may emerge in the law when and if the lack of
    a remedy has been demonstrated.

**Opponents would argue:**

1.  This approach does nothing proactive to advance good practices in
    the marketplace, and will result in a long delay before security
    issues are addressed and consumers are protected. Consumers are
    often the last to know about security breaches. It will take some
    time before litigation based on existing negligence law results in
    judgments. And it will take time for the market to respond to this,
    if that even happens at all.

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20. If relying on existing remedies fails to work, we will be in the
    same or worse position then as we are now, and many more consumers
    will have had their privacy violated due to security breaches.

21. In the meantime, businesses that would welcome guidance from experts
    may be left to flounder and face lawsuits because of a lack of
    awareness, even if they are well intentioned.

### Security Option 2: Maintain a Security Program

Require all commercial Web sites that collect personal information to
develop and maintain (but not necessarily post) a security program for
protecting customers' personal data. This option could take one of two
forms:

The contents and methodology of the security program could be specified,
and businesses could be required to post a brief notice indicating their
compliance.

The requirement could be limited to a simple mandate that the Web site
adopt a security strategy without specifying the details or requiring
that it be posted.

**Proponents would argue:**

1.  A security program is necessary for a commercial Web site of any
    size that collects identifiable information personally identifiable
    information and wishes to keep the information confidential.

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22. The scope of the program may vary depending upon the size of the
    company and in the case of a very small business, one person may be
    able to effectively handle security on a part time basis. However,
    just as marketing, human resources, and accounting are considered
    essential business functions for companies of any size, maintaining
    a security program is also critical to any company\'s operations.

23. Security professionals believe that any effective program, even if
    managed by only one person part time, should involve the elements of
    risk assessment, implementation of controls based on the risks,
    testing and monitoring of controls, and periodic re-assessment of
    risks.

24. A statement that the company maintains a security program that
    assesses risks and implements appropriate controls to address the
    risks need not be incomprehensible to consumers or too burdensome
    for businesses to comply with and insures consumers and businesses
    that security has been considered in the system design.

**Opponents would argue:**

1.  Developing and maintaining a program \-- but not testing it or
    otherwise verifying or assuring that the organization is complying
    with the program \-- will only result in an illusion of security.

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25. The costs of developing, testing, verification, and assurance
    (especially to small or not technically savvy businesses) will be
    significant, diverting resources from the main business purpose.
    Many firms would not know where to turn or how to take the first
    step in developing such a program.

26. If the plan description is posted, much of it may both be
    incomprehensible to non-technical users and all-too-clear to
    technically savvy attackers.

### Security Option 3: Rely on Industry-Specific Security Standards

All businesses operating online that that collect personal information
could be required to adhere to security standards adopted by a
particular industry or class of systems. There are three quite different
options for how the standards are developed:

-   A government-authorized third party could develop standards through
    a process that encourages public participation (notice and comment)
    and may include governmental review.

-   The standards could be established by any third-party but the FTC or
    another applicable agency could require that the standards address
    specific topics (e.g. access, data integrity, notice,
    authentication, authorization, etc.).

-   The standards could be developed by any third-party as long as the
    identity of the standard-setting organization is revealed to
    consumers (this is in effect a security "seal" program).

**Proponents would argue:**

1.  No government agency is smart enough or fast-moving enough to set
    network security standards for a particular industry.
    Industry-specific standards should be set by industry because each
    sector has different computer security needs and methodologies.

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27. Industry groups will have a strong incentive to avoid setting too
    low a bar. Every company with a brand name is held accountable for
    the products sold under that name. So too with security
    standards-setting organizations; those that are associated with
    serious security breaches will lose the confidence of the public.

28. The three options presented under this heading are quite different,
    and c) is significantly better than the others. It associates a
    security standard with a "brand name" so that consumers can decide
    whether security at the site is sufficient. Option b) simply adds a
    requirement that the standards address certain issues. In most cases
    this will be unnecessary and in other cases insufficient. Option a)
    requires that the government license standard-setting organizations;
    it also requires notice and comment and perhaps government review
    for such standards. This option is nearly indistinguishable from
    requiring government-written standards and will require that the FTC
    or some other body make hundreds if not thousands of individualized
    decisions about what security practices should be required in which
    industries, decisions that will have to be remade every three months
    as security standards and challenges evolve.

**Opponents would argue:**

1.  Allowing industry to develop (and police) itself invites lax
    standards and under-enforcement. Self-regulatory organizations that
    are comprised solely of the industry at issue will not develop
    robust standards because doing so may subject its members to
    additional implementation costs and expose them to greater
    liability.

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29. The insular nature of the standard setting process does not
    adequately assess and address the needs and values of other parties
    -- other industries, the public, and policy makers. In the absence
    of other stakeholders industry will fail to address important
    concerns or craft proposals that undercut other important public
    policies.

30. The standard setting process lacks public accountability. It is
    inappropriate to develop substantive policy through entities and
    processes that lack institutional mechanisms for ensuring public
    accountability and oversight.

31. Opponents will find that options a-c do not address their general
    concerns with industry-generated standards. However, opponents may
    find that proposal "a" partially responds to criticisms 1 and 2
    because it constructs a process for soliciting public and policy
    maker input and review and to a limited extent addresses concerns
    about industry capture and stakeholder participation. However,
    because it does not permit other stakeholders to participate in the
    formulation of the standards, it is unlikely to fully ameliorate
    these concerns. In addition, since the item to be protected,
    personal information, is likely to be considered less valuable by
    the business than individuals, the concern about lack of
    representation is heightened. Opponents may find that proposal \"b\"
    (while weaker than \"a\") provides some restraint on the
    standard-setting process by allowing outside interests to decide
    what issues must be addressed. Option \"c\" will garner the greatest
    opposition from opponents as it fails to address any of the concerns
    outlined above.

### Security Option 4: "Appropriate Under the Circumstances" - Standard of Care

Require all commercial Web sites holding personal information to adopt
security procedures (including managerial procedures) that are
"appropriate under the circumstances." "Appropriateness" would be
defined through reliance on a case-by-case adjudication to provide
context-specific determinations. As the state of the art evolves and
changes, so will the appropriate standard of care. An administrative law
judge of the FTC or another agency or a court of competent jurisdiction
could adjudicate the initial challenge.

**Proponents would argue:**

1.  This approach allows for an assessment of security tied directly to
    considerations of circumstance and knowledge. It is impossible to
    summarize in any detail the balance that must be struck between
    security and usability; even for the most sensitive data, such as
    medical information, it may be necessary to lower security standards
    in order to assure prompt treatment for the injured.

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32. The creation of a general standard that is informed by the security
    practices of others similarly situated at a certain date and time
    allows for flexibility and growth while encouraging ongoing
    progress. A similar approach is found in judging medical treatment
    -- doctors are not regulated by an elaborate rulebook but rather by
    the requirement that they practice medicine in accordance with
    accepted professional standards. The law leaves definition of those
    standards to the particular case.

33. This approach is designed to encourage increasingly strong security
    practices. If a bright line rule is adopted, there is little doubt
    that the pace of technical change will leave the adequacy of
    regulation in the dust, and what was intended to be a regulatory
    floor will become a ceiling in practice. Rising tides do raise all
    boats, except those that are anchored to the bottom.

**Opponents would argue:**

1.  In the absence of clear minimum-security standards, courts and
    companies will lack guidance, because there are no universally
    accepted security standards.

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34. For consumers, the absence of any clear definition of what is
    sufficient security may put their personal information at risk from
    companies who do not share the same risk assessment about what is
    "appropriate under the circumstances."

35. For commercial Web sites, there are also disadvantages to this
    approach; their security precautions will not be judged until after
    a breach has occurred, which means that the precautions are more
    likely to be viewed as inadequate in hindsight.

36. An after-the-fact security standard could lead many Web sites to
    ignore security until they are sued.

### Security Option 5: Sliding Scale of Security Standards

Require commercial Web sites that collect personal information to adhere
to a sliding scale of security standards and managerial procedures in
protecting individuals' personal data. This scale could specify the
categories of personal data that must be protected at particular levels
of security and could specify security based upon the known risks of
various information systems. In the alternative or as part of the
standard, there could be minimum-security standards for particular types
of data. The sliding scale could be developed by a government agency or
a private sector entity and could incorporate a process for receiving
input from the affected businesses, the public, and other interested
parties.

**Proponents would argue:**

1.  A sliding scale allows for the matching of consumer protection risk
    to data source, thereby allowing companies to develop a more
    efficient compliance and technology infrastructure.

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37. A sliding scale provides commercial flexibility in the way Web sites
    comply with security standards.

**Opponents would argue:**

1.  This option will embroil the agency or private sector entity in
    trying first to gauge the sensitivity of numerous, different types
    of data and then to match the sensitivity with particular security
    measures. It is an impossible task, and the results will be a mess.

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38. If the sliding scale is produced at a high level of generality, it
    will be unenforceable and probably incomprehensible; if it is made
    specific enough to enforce, it will be a straitjacket for many
    businesses and a series of loopholes for others.

39. Even if it could be prepared properly the first time, a sliding
    scale would have to be updated almost constantly, tasks for which
    bureaucracies are ill suited.

## Security Recommendation

The great majority of the Committee believes that the best protection
for the security of personal data would be achieved by combining
elements from Options 2 and 4. (Of course, existing remedies would not
be supplanted by this solution.) We therefore recommend a solution that
includes the following principles:

-   Each commercial Web site should maintain a security program that
    applies to personal data it holds.

-   The elements of the security program should be specified (e.g., risk
    assessment, planning and implementation, internal reviews, training,
    reassessment).

-   The security program should be appropriate to the circumstances.
    This standard, which must be defined case by case, is sufficiently
    flexible to take into account changing security needs over time as
    well as the particular circumstances of the Web site \-- including
    the risks it faces, the costs of protection, and the data it must
    protect.

# Other Considerations not Addressed

## Enforcement Alternatives

The Committee was asked to provide its views on access and security in
the context of the Fair Information Practice principles and industry
self-regulation. We did not examine legislative or enforcement options
in any detail, but it was difficult to address some of the access and
security issues without giving some thought to the question of
enforcement. As part of the security discussion, in particular, we
assembled a range of representative options for enforcement of security
principles. Some of these options are consistent with self-regulation,
and others would require government intervention. We record them here,
not for the purpose of recommending any particular course of action but
to show the range of possibilities open to industry and government.

**Rely on Existing Enforcement Options** - Many of the options include
the publication of the Web site's security procedures or its adherence
to particular standards. Such postings are subject to traditional FTC
and state enforcement if the statements are false. It is also of course
possible for consumers to bring their own actions for fraud, false
statements, or underlying negligence in the handling of the data.

**Third-Party Audit or Other Assurance Requirements** - Rely on
independent auditors to ensure compliance with standards. This structure
could require security standards to be verified by an external body and
public disclosure of the findings. This option would provide more
flexibility and could adjust faster to the changing threat environment.
It would, however, introduce an additional cost and overhead that may
not be justified by all industries and for all levels of risk exposure.
It would, on the other hand, introduce a neutral, objective assessment
of a company's security infrastructure relative to its industry.

**Create Express Private Cause of Action -** Congress could establish a
private right of action enabling consumers to recoup damages (actual,
statutory, or liquidated) when a company fails to abide by the security
standard established through one of the options set out above.

**Government Enforcement Program -** The FTC or another agency could
enforce compliance with standards using its current enforcement power or
using newly expanded authority. The enforcement could establish civil or
criminal fines, or both and other equitable remedies. (This option is,
in some respects, modeled after the regulations governing the financial
services industry as enforced by the Federal Financial Institution
Examination Council (FFIEC). The FTC could establish a similar
enforcement regime for other industries.)

## Advancing Technologies

We live in the middle of an information revolution where new
opportunities for the use as well as the protection of personal data
appear daily. Significant new technologies raise questions about privacy
that will have to be addressed. For example, with new wireless
technology, a unique identifier heretofore not linked to a specific
individual may now be linked to an individual identified with a phone
number, location information, or other identifier. And wireless
communications can be intercepted in an undetectable manner. Similarly,
communicating appliances will have the potential to share personal data
that may be linked to an individual.

The privacy implications of new technologies may be profound. We have
attempted to write options and our recommendation in a manner
independent of these new technologies. However, the FTC will have to
monitor developments in these areas closely to stay abreast of the
privacy and security implications that new technologies may bring.

## Security Incident Data -- Industry Sharing With The Government

None of the Security Options discussed by the Committee addressed
industry sharing security incident data with the government. However,
during a Committee meeting this issue was raised. Because this issue is
not raised by the security options, the Committee did not examine the
question of whether or not the Freedom of Information Act (FOIA) is a
barrier to the sharing of security incident data between industry and
government. The Committee expresses no opinion on this issue.

# Charter of the Federal Trade Commission Advisory Committee on Online Access and Security

Official Designation

The Federal Trade Commission Advisory Committee on Online Access and
Security

Scope and Objectives

The purpose of the Advisory Committee is to provide advice and
recommendations to the Commission regarding implementation of certain
fair information practices by domestic commercial Web sites -
specifically, providing online consumers reasonable access to personal
information collected from and about them and maintaining adequate
security for that information. The Advisory Committee will consider the
parameters of reasonable access to personal information and adequate
security and will present options for implementation of these
information practices in a report to the Commission.

The Advisory Committee will consider, among other things, whether the
extent of access provided by Web sites should vary with the sensitivity
of the personal information collected and/or the purpose for which such
information is collected; whether the difficulty and cost of retrieving
consumers\' data should be considered; whether consumers should be
provided access to enhancements to the personal information obtained
directly from them, such as inferences about their preferences and
information about them derived from other databases; appropriate and
feasible methods for verifying the identity of individuals seeking
access; whether a reasonable fee should be assessed for access, and if
so, what a reasonable fee would be; and whether limits should be placed
on the frequency of requests for access, and if so, what those limits
should be.

The Advisory Committee will also consider how to define the standards by
which the adequacy of measures taken by Web sites to protect the
security of personal information collected online may be judged; what
might constitute reasonable steps to assure the integrity of this
information; and what managerial and technical measures should be
undertaken to protect this information from unauthorized use or
disclosure.

Duration

The Advisory Committee will conduct its work from February 4, 2000
through May 31, 2000.

Reporting Relationship

The Advisory Committee will report to the Designated Federal Officer,
David Medine, Associate Director for Financial Practices, Bureau of
Consumer Protection, Federal Trade Commission.

Support

The Federal Trade Commission will provide the necessary support services
for the Advisory Committee, including a court reporter, transcripts of
meetings, and photocopying.

Duties

The duties of the Advisory Committee will be solely advisory. The
Advisory Committee will provide advice and recommendations in the form
of a written report to the Commission describing options for
implementing reasonable access to, and adequate security for, personal
information collected online, and the costs and benefits of each option,
by May 15, 2000.

Costs

The operating cost of supporting the Committee\'s functions is estimated
to be \$138,000. Members of the Advisory Committee will not be
compensated, and must bear the cost of their own travel-related
expenses. It is estimated that 1.5 FTE will be required to support the
Committee.

Meetings

It is anticipated that the Advisory Committee will meet four times.
Subgroups of the Advisory Committee will likely meet more frequently.

Date of Termination

The Committee will terminate on May 31, 2000.

Charter Filing Date

January 5, 2000.

By direction of the Commission.

Donald S. Clark\
Secretary of the Commission