Melugin Letter To The FTC

December 5, 2000Robert PitofskyChairmanThe Federal Trade Commission600 Pennsylvania Avenue, N.W.Washington, DC 20580

Dear Chairman Pitofsky:

Recently, contacted its 23 million customers by email about changes in how their personal information will be handled.  Instead of applauding’s pro-active approach to keeping consumers informed, many advocates of federal regulations for online information collection have criticized the popular online retailer for the terms of the new policy.  To do so is to miss the larger point; the company is going to great lengths to keep customers informed about how their personal information is being managed so that they can make informed decisions about where to shop and with whom to share this data. Many of the changes to’s privacy policy were doubtlessly inspired by the debacle. As you know, the recently bankrupt online retailer attempted to sell its customer list after promising consumers their information would not be shared with third parties and promptly came under fire from the Federal Trade Commission. In order to avoid similar confusion, changed its privacy policy to include provisions for instances where customer information might be transferred to different owners. And instead of passively posting the changes on their site, Amazon went to the trouble of emailing their customers about it.But in light of the criticism Amazon has received for the move, it seems that those advocating government intervention of information collection on the Internet are more interested in setting the terms of the exchange, than they are in ensuring that consumers are able to decide for themselves with which privacy practices they are comfortable.The controversy highlights this distinction between efforts to empower regulators and efforts to empower consumers. The new privacy policy explains that visitors to the site will no longer be given the ability to “opt-out” of having information collected about what products they look at or purchase.Critics have labeled this as a step backward for the privacy of consumers, but denouncing the specifics of the policy implies that the privacy preferences of critics should be everyone’s privacy preferences. It is unlikely that one standard for privacy could appeal to everyone. For example, some consumers appreciate being greeted by name and being shown books or videos on the subjects they’ve shown interest in before while others maybe uncomfortable with that level of personalization.It’s true that some will prefer to reveal nothing about themselves while online. But it’s also true that in light of’s email effort, these individuals are now in a better position to make a choice that is in accordance with their privacy preferences the next time they want to buy a book. And if enough people object to the policy changes, it’s likely that will want to reconsider its practices. But if not, anonymity aficionados will simply shop elsewhere and will cater only to those who find the new policy agreeable. The point is that consumers should be able to decide for themselves what they are and are not comfortable with because it will surely vary from one online shopper to the next.By dictating the terms of information exchange online, advocates of online privacy legislation will create “one size fits all” regulations that won’t be able to cater to the varying privacy preferences of consumers. The decentralized marketplace will best be able to take varied consumer preferences into account. For instance, it’s not difficult to imagine an online bookseller making its “we don’t collect any information about our customers” privacy policy into its competitive edge. Similarly, a retailer might collect and sell every tidbit of data about its customers in exchange for a ten percent discount. Rigid regulations would never facilitate this type of variety.Consumers should remain able to decide how their information is being gathered and used by dealing only with sites that operate in accordance with their preferences.  The role of government should be to hold companies to their policies, but the terms of online information exchange should be left to markets to decide, not to regulators to dictate. A Federal Trade Commission investigation into’s actions would send a muddled message to online retailers; if advocates of federal regulations don’t like your terms, there are no points for efforts to empower consumers to decide for themselves.  I urge the Federal Trade Commission to refuse requests to investigate this matter.

Respectfully,<?XML:NAMESPACE PREFIX = O />

Jessica MeluginPolicy Analyst

Cc: Commissioner Sheila Foster AnthonyCommissioner Thomas B. LearyCommissioner Orson SwindleCommissioner Mozelle Willmont Thompson