When it comes to protecting consumer information on the Internet, the writing is on the wall: Government regulation is inevitable, says Robert Lewin, the new executive director of Truste, an Internet watchdog group that certifies businesses' privacy practices with a seal on their Web sites. And that's changing Truste's approach to this hot issue.

In the past, Truste's position has been that self-regulation -- with the help of industry groups like his -- should be enough to protect consumers and keep lawmakers and regulators at bay. Now, says Lewin, who has been on the job less than a month, he's charting a different course for the two-year-old nonprofit group whose approximately 700 members are mainly small companies, though they also include giants like Microsoft Corp. The idea is to anticipate what the laws and regulations will look like and help businesses comply, thereby deflecting additional criticism and constraints.

"My sense is that when Truste first got started, there was a feeling that, 'Gee, if we get our act together, the government is not going to do anything.' Well, I am not sure that ever would have been the case," the 55-year-old former Hewlett-Packard executive contends in an interview with Business Week Frontier Online.

Lewin says he plans to pay particular attention to small businesses because 85% of Truste's licensees are entrepreneurs whose companies have revenues of $5 million or less. He says they are frequently the least informed about potential privacy regulations headed their way. "The smaller companies really have to start from ground zero, in many cases, with things like privacy policies," he says. They don't tend to think about whether there might be "some rules about what happens when you collect these pieces of information, or if you are selling these things to children?"

Lewin says Truste plans booklets, videos, and presentations at trade groups to educate entrepreneurs about their responsibilities and potential liabilities when they collect and use clients' data online. He also wants to reach small businesses through Web sites like Shop.org, an online trade group for entrepreneurs in retail.

Efforts to regulate data use on the Net appear to be gathering momentum. In late April, Senators Conrad Burns (R-Mont.) and Ron Wyden (D-Ore.) introduced the bipartisan "Online Privacy Protection Act of 1999" in the Senate, which would regulate how businesses collect and use private information on the Internet. This one would make the U.S. Federal Trade Commission the watchdog for Web commerce.

Lewin said the Burns-Wyden proposal doesn't faze him. He cites as an example of Truste's approach the child-privacy protection guidelines for its licensees, which anticipated the 1998 Children's Online Privacy Protection Act and the FTC's implementing regulations, due out later this year. "What they are proposing, we are already implementing," Lewin says.

Truste's shift in position under Lewin doesn't mollify some proponents of regulation for E-commerce data use. Jason Catlett, president of Junkbusters Corp., a Green Brook (N.J.) privacy-protection advocacy group, which has its own Web site, says Truste's position is neither new nor in consumers' interests. "What the seal organizations do is, they anticipate what is going to be the minimum legal requirements and have that in advance for their licensees," he says. Given the strong emotions on all sides of this debate, that may not be as easy to pull off as Lewin makes it sound -- either for Truste, or entrepreneurs trying to keep abreast of the issue.

By Jeremy Quittner in New York
Jeremy_quittner@businessweek.com

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