Online, Internet privacy becoming important business issue

Until recently business owners have had limited reason to consider an individual's right of e-commerce and Inter-net-use privacy. But privacy issues are moving to the forefront because of the proliferation of electronic transactions.

Every day courts around the country attempt to interpret and apply the ever-changing legislation pertinent to privacy issues. Ideally courts would balance privacy against other rights such as freedom of speech; but, unfortunately, the courts are not always moving in the same direction. Currently there are almost 50 bills pending in Congress relating to Internet privacy rights. If enacted, some of this legislation would help clarify online privacy issues for business owners.

Online and Internet privacy is an important issue because employers can be found liable for defamatory statements, racially insensitive and sexually suggestive employee e-mails.

Tracking employees online

A California court recently held that companies cannot track employee Inter-net use unless a specific written policy explains to the worker that monitoring may occur. But other courts have determined that employees don't have a reasonable expectation of privacy for any electronic communication or Internet use at work. Pending legislation will help clarify employer rights and obligations with respect to employee computer use.

The ability to rapidly accumulate and transfer databases of consumer data i.e., customer lists has spurred a booming online industry. One of the most important privacy issues relates to the collection, brokering, transferring and publishing of this consumer information. Again, courts don't particularly agree on the permissible scope of dissemination of consumer information. Congress is working to impose restrictions and requirements on collection and use of online consumer information.

The Gramm-Leach-Bliley Act, enacted in 1999, requires a financial institution to notify consumers before disclosing any nonpublic personal information to third parties. Pending amendments to the act will impose further restrictions.

Cookies

Another hot topic is the use of "cookies" by online businesses. Web users may be assigned a cookie, which allows a Web site server to track user information, such as which sites the user visits and how long they are at the site. The cookie allows anonymity of the Web user be-cause no personal data is typically associated with the cookie. This information is accumulated and becomes quite valuable to online marketers for determining placement of advertisements. Now, however, Internet advertisers are pushing the privacy envelope.

DoubleClick Inc., a large online advertiser, was sued in California for accumulating and using personal Web user information such as names, addresses and telephone numbers. Courts in New York have shut down information-sharing activities where there isn't adequate assurance that consumers had notice that their information would be brokered. At least five states have legislation pending that would eliminate or limit collection and dissemination of consumer information. The pending Consumer Internet Privacy Enhancement Act would address collection of online consumer information at the federal level.

Protecting children

Just because the legislature passes a law, however, does not mean that it will be enforced. In 1998, Congress passed the Child Online Protection Act, imposing liability on publishers profiting from Web sites containing material harmful to minors. The day after COPA was enacted, litigation by the American Civil Liberties Union alleged that the act violated free speech rights. The trial and appellate courts enjoined the attorney general from applying COPA penalties against several online pornography sites. The legislation will be reviewed by the Supreme Court this fall. In 1996 a similar law, the Communications Decency Act, was struck down on First Amend-ment grounds by the Supreme Court.

(Joseph L. Johnson is an attorney with Lathrop & Gage LC.)