May 7, 1999

Eric Fredell
Electronic Commerce Task Force
U.S. Department of Commerce
Room 2009, 14th and Constitution Avenue, N.W.
Washington, DC 20230

Dear Mr. Fredell:

The Internet Consumers Organization (ICO) commends the efforts of Ambassador David Aaron, Barbara Wellbery and others in the Department of Commerce to develop an agreement with the EC and the EU member states on "Safe Harbor Principles" that are designed to avoid disruption of information flows between the European Union and the United States. In addition, the "Principles" offer an alternative to companies that may not use model contracts to provide consumer privacy protection.

ICO is pleased to offer the following comments on the "Principles" and explanatory materials:

1. While we concur with the list of safe harbor benefits for U.S. organizations, as stated in Ambassador Aaron's April 19, 1999 letter, ICO believes that consumers in the U.S. and Europe will benefit most from an open and competitive global marketplace that permits the free flow of information between countries. An agreement on the "Principles" will help maintain open markets and facilitate global e-commerce, without undermining existing or future consumer privacy protections. Therefore, we recommend adding a section to the "Principles" or to the explanatory materials that explicitly states their potential benefits to consumers, including: wider adoption by businesses of consumer privacy policies and practices; enhanced consumer privacy awareness; and greater confidence in online purchasing and financial transacting.

2. ICO believes that the driving force for privacy and security protection will be consumers who are educated, aware of the opportunities and risks of purchasing products and services over the Internet and empowered to protect their own interests. The Internet is rapidly shifting market power from sellers to consumers, who are deciding how much they want to pay for what they want to buy, which stimulates competition for the consumer's business. Similarly, consumers have become more assertive in demanding that their personal information be protected, and that they be given greater control over the collection and use of such information. The "Principles" will help empower consumers to demand that companies provide levels of privacy protection that meet their particular needs.

3. In its "First Annual Report" issued in November 1998, the U.S. Government Working Group on Electronic Commerce forecast growth from 250 million Internet users in the year 2000, to over a billion users during the first decade of the next century. To date, despite polls that indicate high levels of concern over privacy, consumers are eagerly adopting e-commerce. But, a significant percentage of potential e-commerce users may be deterred from consistent, repetitive online shopping unless they have confidence and trust in dealing with online companies. ICO believes that the "Principles" can contribute to the development of a trusted online environment, which will lead to widespread consumer acceptance and use of e-commerce on a global scale.

ICO has recently been formed to provide policymakers and other interested parties with fair and balanced policy positions on issues of importance to both Internet consumers and providers of online services. Our objective is to help shape a progressive environment for the Internet, and to conduct research and education programs to enhance consumer confidence in using the Internet for e-commerce and other purposes. ICO is in the process of filing for non-profit status.

ICO hopes these comments are helpful. Please contact us if we can be of further assistance.

Sincerely.

Peter Gray                                 Kent Brunette
ICO Co-Founder ICO              Co-Founder
gray@internetconsumers.org      brunette@internetconsumers.org
(202) 496-6106 (voice)             (202) 342-5368 (voice)
(202) 452-9180 (fax)                 (202) 342-9033 (fax)