And it creates some serious practical problems, too. Enforcement efforts will be far, far more effective if they can be targeted against actual perpetrators of identity theft, fraud, and so on. Requiring enforcers to disperse their focus to hundreds of sites simply because those sites don't have a seal would be an incredible waste of time. There are many laws already against fraud and deceptive practices. Self-regulation that arises as a natural outgrowth of consumer demand is truly voluntary and decentralized.
Bad service is checked by competition.
Ultimately, we might see nearly as many different privacy policies as there are e-commerce companies. In some cases, no third-party rating systems would be able to capture the extraordinary variety of patterns of customer preferences that emerge. But from my standpoint that's too radical a step, both unnecessary and not well informed. For once, the Cato Institute's position isn't the radical one.