Amazon Privacy Decisions: Is There a Watchdog in the House?

In addressing the issue of Internet privacy and the handling of data collected in e-commerce transactions, the U.S. Federal Trade Commission (FTC) seems to be employing that old adage: No harm, no foul.

If only it were that simple. Instead, by letting Amazon.com (Nasdaq: AMZN) and its subsidiary Alexa off the hook, while acknowledging that the two "likely were deceptive" about their approach to customers' privacy, the FTC abandoned the public's interest.

So what if Amazon and Alexa didn't sell the information or share it? Their privacy policies didn't reflect the truth, so Amazon and Alexa deserved more than a slap on the wrist -- I mean, at least a slap on the wrist.

In the wake of the FTC's inaction, you may be wondering whether the Internet has any kind of effective privacy police.

The answer? Take a look in the mirror.

Not So Fast

You see, some good did come out of the lengthy investigations and the press frenzy that accompanied at least the start and the finish. Web surfers and e-commerce customers have become far more aware of their rights and, more to the point, their responsibilities.

The message from the FTC is that consumers are basically on their own when it comes to protecting personal information on the Web. Yes, the FTC knows deception when it sees it, but they don't really feel like getting all combative about it.

The disappointing thing is that the case against Alexa had the potential to set a precedent. It offered the FTC a nice chance to make a statement about online privacy. But the FTC chose to set a toothless, mealy-mouthed kind of precedent. Now everyone knows: The FTC's bark is much worse than its bite.

Weak in the Knees

Timing is another factor. The FTC's decision on Alexa came nary a day after Amazon's privacy policy flip-flop from last fall was cleared by the same agency.

That case seemed less sinister to begin with, since Amazon came right out and told users what its new policy would be. But taken together, the decisions on the two cases seem to give firms operating on the Web a lot of leeway.

In the Alexa case, for instance, technological stupidity is now a viable defense: The company claims it didn't know that its software was recording identifiable information on users. It just sort of happened. Yeah, right.

And the decision on Amazon's privacy policy tells e-tailers that they can do a 180-degree turn on privacy, as long as they tell people in an e-mail. It's open season on personal information all over again, right?

Open Window

It certainly has to be depressing for those privacy watchdogs who used up quite a bit of their energy in pursuing these allegations. Groups like EPIC and Junkbusters raised a stink over Amazon's privacy flip-flop, only to have the FTC tell them it was no big deal .

The upshot of all this is that the FTC has set pretty wide boundaries for Web firms to play inside of, giving them ample tools to conduct their business right on the edge of ethical mayhem. Above all, the FTC has given these companies more than enough rope to hang themselves.

And yet ... hopefully, the FTC's inaction still won't encourage other companies to follow in the footsteps of Alexa and Amazon. With a much more wily and aware public on the other end of the Internet connection, companies that play fast and loose with privacy policies do so at their own risk.

The FTC might not be a force to be reckoned with, but an educated online shopper with eyes wide open certainly is.

What do you think? Let's talk about it.