In 2003, Congress passed several amendments to the Fair Credit Reporting Act. These amendments were put in place to address problems with identity theft and require some companies to develop a written program for identifying suspicious activity. These changes apply to credit reporting agencies and all other businesses that extend credit and have “covered accounts.” Extending credit can include any transaction where a good or service is paid for after it is received. Covered accounts can include accounts with multiple payments or transactions, as well as some types of accounts that are particularly vulnerable to identity theft. These new rules are in effect as of November 1st, although enforcement by the FTC will be delayed until May of 2009.

If you’re not sure your business is in full compliance with these rules, it is important to review your red-flag policies now. If you think your business might be included but you have not yet developed guidelines, you can review the FTC’s recommendations here. If you are unsure of how to comply with the rules, I recommend you seek the advice of counsel, but you can also utilize free resources at ftc.gov, or e-mail questions to redflags@fcc.gov. If you haven’t yet complied, you may still have time to amend your policies before enforcement actions begin. Of course, complying fully as soon as possible will help protect the customers you serve!

Tomi Turner works in ERA’s government affairs department.

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This week, FCC Chairman Kevin Martin announced his support for a plan to use the “white spaces” freed by the transition to digital for unlicensed wireless use. The space that will become available after the transition in February is particularly valuable for providing wireless Internet. The part of the spectrum that is now free is able to move through walls and other obstacles, making it appropriate for large-scale wireless development projects. The main obstacle to the approval of this use was concern that the use of the white space would cause interference with television signals. However, recent testing by the FCC demonstrated no significant interference with television signals. Developing and deploying this technology will allow for the development of inexpensive wireless Internet and more serious competition, especially in urban areas. It might also help expand affordable access to under-served urban areas.

Increased competition in the market will result in lower prices and better service. By expanding the availability and quality of broadband, all retailers currently using the Internet will have an opportunity to reach more customers. Final approval of this plan for the use of the white space will be subject to a vote at the FCC meeting on November 4th. What a day for decisions!

Do you agree with the use of freed television white space for wireless Internet?

Tomi Turner works in ERA’s government affairs department.

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As you may have heard, NewEgg has stopped collecting sales tax from New York customers. Unlike Amazon, which has initiated litigation challenging New York’s tax policies, or Overstock.com, which has cut New York affiliate programs in order to avoid the tax, NewEgg has taken a new path. Some insiders suggest it may also be “restructuring” its affiliate programs as well, but it seems likely the company also expects enforcement to be too costly for the New York state government. Because NewEgg is a California company that does not have a physical location in New York, any kind of enforcement will likely involve extensive legal challenges before the courts can even determine where the case should be tried. Then, there is an extremely strong Constitutional argument that the New York law cannot extend to businesses that do not have a physical nexus in the state. NewEgg will probably also argue that its affiliates are structured in a way that has never subjected the company to the law.

All of this litigation would be extremely costly. The New York state government only expected to collect $50 million a year in total, and now companies are ditching their New York affiliates to avoid the tax, so the revenue generating potential of this tax is pretty low. The amount the state could collect from NewEgg if it wins the challenge would, of course, only be a fraction of that amount. Plus, there is evidence politicians are feeling pressure from constituents, including customers and advertising agencies, to suspend this tax. The New York State Senate has already passed a bill to repeal it. All this said, NewEgg might be taking a risk, but with extremely high consumer ratings and a steady stream of cash, it can probably afford it.

Tomi Turner works in ERA’s government affairs department.

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I have heard more than enough about John McCain’s limited understanding of the Internet (everyone look, a politician was honest; let’s all berate him for it!). But, at the very least, it brought a major issue forward. The plain and simple fact is the Internet is a scary and complicated thing for many in Congress. During some hearings I attended this week, it became clear that some members really did not understand the way the Internet works. Many members did not seem entirely clear on the difference between searches and search ads. One member even admitted confusion about what cookie is. Another member referred to IP addresses as IPS’s. I don’t want to pick on any members, and I can’t even really say I blame them. The average age for members of Congress is near 60, and only a few members have had experience in the Internet industry. In contrast, many members have private-sector experience that easily allows them to become leaders in other fields, like finance, agriculture or energy. That is why educating lawmakers about the way the Internet works (and even what exactly it is) will be essential for the Internet industry. I am convinced that better understanding is the key to better legislation. ERA looks forward to working with industry leaders to achieve this goal.

Tomi Turner works in ERA’s government affairs department.

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Yesterday I had the opportunity to attend a hearing on privacy and the Internet. The Senate Commerce, Science and Transportation Committee is currently investigating the use of behavioral advertising and its potential impact on personal privacy. The industry representatives did an excellent job of explaining their privacy policies. From my perspective as a consumer, I found the testimony persuasive and I am not concerned that information collected about me will fall into the wrong hands. One company offered testimony that it had more than 40 full-time privacy officers; another said they let users customize privacy settings, and all of the companies described the techniques they use to anonymize data.

However, the industry is being put on the defensive by groups who would suggest tailored advertisements are somehow a threat to the consumer. Several questions posed by the senators reflected concern about the practice of behavioral advertising in general, even if data is adequately secured. As advocates for the industry, we now have the task of explaining to lawmakers that advertisers are not interested in sensitive personal data, and have a strong incentive to protect the consumer. The consumer has many choices and the Internet sites are in many ways more subject to the consumer’s whims and fancies than other businesses. Visiting different websites usually doesn’t cost more money, and physical location isn’t an issue. If consumers are concerned about a website’s privacy policies, it is easy for them to stop visiting that website altogether.

It is also important to inform lawmakers that regulating Internet ad companies is not even the best way to protect consumers from privacy breaches. The government could more easily punish and deter illegal hacking or misuse of data. They could also provide grants to Internet advertising agencies to aid in developing new technology to protect consumer’s privacy. It’s obvious to me that Internet advertisers aren’t the bad guys, but it might be a struggle to convince Congress of the same.

Tomi Turner works in ERA’s government affairs department.

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If you’re reading this blog, chances are that you already know how important it is for consumers to be able to view videos online. Online videos help sell products because they let consumers have a “virtual test drive” of a product before they buy it. These videos get consumers excited about new products and make them want to learn more about emerging trends. Today, the same is increasingly true of political candidates and issues. Long before votes are cast in November, millions of Americans will participate in the political process by watching videos on the Internet. According to a recent Pew poll, as many as a quarter of adults have already watched political videos online. That number is expected to grow. Perhaps the more exciting news is that the Internet appears to be getting more people involved and informed. The United States has historically had some of lowest voter turnout among developed democracies, and much of this apathy occurs when voters do not feel informed about the issues. It is difficult to “accidentally” read a newspaper or tune into the evening news, but it is quite easy to come across political information online by mistake. More than half of those who reported viewing political videos online said they did not go on the Internet for the purpose of learning about politics. That means the availability of videos online is helping to strengthen participation in the political process.

Aside from political videos, the Internet is also ripe with funny videos we share with our family and friends.

Then you see this charming cartoon you half remember from elementary school, and you learn about a threat to the freedom of the Internet.

Click here to learn more about the threat to the Internet’s viability and freedom.

Tomi Turner works in ERA’s government affairs department

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With Senator Barack Obama as the presumptive 2008 Democratic Presidential nominee, now is an interesting time to examine his policy positions on the Internet and the growing political influence of electronic retailing. Interestingly, Obama has received relatively little of his funding from the traditional fundraising bulwarks, telecom service providers. Senator Hillary Clinton raised the most money from telecom service providers, coming in with a little more than half-a- million dollars*. Even so, in a strong demonstration of the growing political power of the Internet industry, contributions by the Internet and software industry were higher for Clinton, Obama and McCain than each of their corresponding totals in the telecom services industry*. Senator Obama alone has received $2.7 million from the Internet and software industry*. These donations come from industry PACs, as well as from donations by employees and their families, and include contributions from software developers.

Obama’s fundraising potential in the Internet industry is definitely linked to the strong policy stances. His campaign website includes a section on the importance of “protecting the openness of the Internet” by preventing network providers from charging fees “to privilege the content of applications of some websites and Internet applications over others.” He has voiced his stance on Net Neutrality in a podcast that is featured on his website. It is by no means clear who will be the next president, but it is certain the influence of the Internet industry is increasingly significant in Washington.

Tomi Turner works in ERA’s government affairs department

*Center for Responsive Politics

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