The comments came as the industry and privacy-rights organizations awaited a massive audit of Web sites by the Federal Trade Commission slated for this month. The results are expected to be released in July.
A Web of security?
The FTC will be auditing 1,200 Web sites to see which ones post privacy rules.
In total, 1,200 sites will be visited by the FTC's privacy auditors.
No privacy, no money
Online privacy is at the top of the concern list of consumers who use the Internet.
In a survey of 999 adults, of which 404 were Internet users, a March BusinessWeek poll found that 61 percent of the non-users would go online if their privacy were protected. Experienced users were more adamant -- 78 percent would use the Internet more if privacy were protected.
With such numbers, it's no wonder that the FTC is pressing hard to get privacy issues addressed by Web sites.
Yet, the industry fears that the audit will reveal that the majority of sites do not post any policy on how they gather and use information collected on visitors.
'They're auditing sites, but they haven't set a standard for what they want to see.'
-- Craig Donato, Excite Inc.
"Quite frankly, the industry has not done enough," said TRUSTe's Scott. "And that shows little foresight. They can voluntarily regulate themselves, or Congress will happily do it for them."
If this month's audit turns up little industry initiative, the FTC won't be sympathetic.
"They've had a year and a half" to ease consumer concerns, said Claudia Farrell, spokeswoman for the FTC. She estimated that more than 80 bills related to privacy sit before Congress today.
TRUSTe's Scott believes the FTC wants the industry to succeed, but isn't willing to stand by if nothing is done.
"It is not going to stick its head in the sand and pretend there is no problem," she said. "They will say to the industry, 'You blew it.' "
The industry hopes it doesn't come to that.
E-commerce too new
Yet, several companies beefing up their presence on the Web are unsure how to approach privacy.
Craig Donato, vice president of product marketing at search engine Excite Inc., wishes the FTC would have given out some guidelines before the sweep.
"They're auditing sites, but they haven't set a standard for what they want to see," Donato said. Excite, which posted its policy earlier this year, only provides a user's personal information to third parties after it's received permission.
For Purple Moon -- a site geared toward girls -- privacy is of paramount importance. "We want girls and their parents to feel safe on our site," said Karen Gould, spokeswoman for Purple Moon. "We involve the parent in the verification process, and we don't sell our information at all." The site has more than 51,000 users registered; each visits an average of 1 1/2 times per day, viewing 50 pages each time.
"It took many years -- if not decades -- for direct mail and telephone marketing to self-regulate," said Chet Dalzell, spokesman for the Direct Marketing Association. "We've had only two years."
Yet, with only 700 policies generated since summer, even this proactive effort may be too little too late.
ZDNN's Lisa Bowman also contributed to this report.