Nothing harsher than coaxing it to let outsiders audit its privacy practices. Over the summer, for instance, they helped to dissuade the Federal Trade Commission from recommending privacy legislation to Congress, despite an industry-funded report that showed fewer than 10 percent of Internet sites that collect personal information had adequate privacy policies. It's an inherent conflict of interest. By displaying a seal and posting a privacy policy, the argument goes, a company makes promises that are enforceable under consumer fraud laws if broken. But the only enforcer in the United States the FTC would rather help violators move into compliance than mete out fines that could dissuade others from taking foolish risks with customer data.
Entrepreneurs like to talk about pushing the envelope with business models and new products.
But an unfortunate byproduct of that attitude is that companies are pushing the privacy envelope. So far, consumers have shown little resistance. Consider their willingness to take free Net access and PCs in exchange for submitting personal data and promising to watch lots of ads. No matter where you turn on the Web, someone will be collecting your data. Apologies seem to be enough to placate the industry's watchdogs, who say government oversight would hold back the Internet Economy.