Feds to Take More Active Role Policing E-Commerce

A new office of the U.S. Federal Trade Commission is slated to open Friday to oversee Internet transactions, commerce and advertising, despite objections from major Internet players. Arguing other FTC divisions play the same consumer protectionist role in non-electronic commerce, the FTC says the new Internet office will simply keep a closer eye on whether online businesses are being honest in ads and other online statements.

The new office would presumably oversee Internet companies’ compliance with its current offline guidelines for commerce and truth in advertising. The commission plans to discuss details of the new office’s role Friday at a workshop on online advertising. The FTC also hopes to “reduce any uncertainty as to how [its current rules] apply to the electronic media.”

The announcement comes despite objections from numerous Internet industry players to an increased role in government oversight of the fledgling industry.

“Technology in electronic media is constantly and rapidly changing, and generalized application of rules and guidelines to all Internet online advertisements would not be fair or make sense because of the vast differences in function, presentation and capabilities of emerging technologies,” AOL told the FTC in comments last summer, reacting to the agency’s plan to get more involved in e-commerce.

Several other large and small companies doing business online echoed AOL’s concerns.

Needs Congressional Backing?

The Information Technology Association of America, which represents 11,000 product and service companies in the information technology arena, argues Congress should make the first move. As reported, Congress is starting to pay closer attention to e-commerce, launching four separate bills in the past two months to ensure secure Internet transactions.

The ITAA argues that, with few details available on the new office’s functions and responsibilities, the bureau could simply become “a new layer of bureaucracy aimed at regulating burgeoning e-commerce transactions.” According to the ITAA, “Congress should first have the opportunity to carefully review the Federal Trade Commission’s Internet proposal…. Whatever good intentions this proposal might have, establishing a special FTC Internet bureaucracy is the wrong signal to send to foreign governments about Internet regulation.”

Furthermore, the ITAA claims, singling out the Internet for special oversight would not be fair to the fledgling industry. The FTC never established special offices for the oversight of shopping malls or 900-number services, the ITAA argues, and should therefore not do so for a similarly broad marketplace such as the Internet.

Workshop to Talk Things Over

The announcement of the new FTC office is slated to be made Friday during the commission’s public workshop on online advertising rules and guidelines. The FTC asked for comment from online businesses, consumers and other interested parties last spring about how its published advertising rules and guidelines should be adapted or applied to online commerce. More than 60 parties, about half consumers, submitted comments last summer. Twenty five of them plan to participate in Friday’s workshop, including the ITAA and AOL, Bell Atlantic Corp., Dell Computer, the Center for Media Education and a group of State Attorneys General.