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WASHINGTON, D.C. -- Using a little-known delay tactic, Senate Republican Leader Trent Lott stopped Democrat Ernest "Fritz" Hollings's online privacy bill from leaving the Commerce Committee on Thursday morning, moments after the committee voted to approve the bill for Senate consideration.

Hollings assailed Lott's action as "an underhanded way to try to defeat the online privacy bill." Lott's tactic only slowed the process, according to a Hollings representative. The committee will reconvene on Friday morning to complete Thursday's session, the spokesperson said. Despite the delay, the 15-8 vote in favor of the bill indicates that the committee will most likely approve the legislation.

The bill, introduced in April, is intended to encourage electronic commerce by reassuring potential customers that their personal information is protected. Buyers would have to give consent--"opt in"--before e-retailers could collect their information. The Online Personal Privacy Act (S-2201) separates personal information into sensitive and nonsensitive categories, and aims to create a national online privacy policy that preempts state regulations.

Lott, who strongly opposes parts of the bill, said, "This privacy bill is not ready." He believes the Senate will not pass it in its present form.

Bill Modified

Hollings, of South Carolina, has submitted a substitute version of the original bill in response to "hundreds of suggestions from consumer groups, academics, and industry groups." Although he says the substitute bill addresses concerns raised by the business community, some e-commerce groups retain their objections.

"The bill still has gaping holes," says Daniel Jaffe, executive vice president of the American Association of National Advertisers. For example, a company may have to comply with several conflicting privacy standards because other federal privacy laws already exist, Jaffe says.

Hollings's revisions address three debated topics: consumer protection, related real-world protections, and monitoring.

He modified the private-right-of-action provision to apply only in cases of fraud when a person's sensitive information is violated. One could get damages of up to $500--down from $5000 in the original version.

The second substitution would require the Federal Trade Commission to determine equivalent privacy-protection rules for the offline world, since the bill addresses only e-commerce.

Also, the revised bill allows companies to have self-regulation standards, known as a "safe harbor," which the FTC can audit. The safe harbor would shield companies from legal suits if a consumer's privacy is breached.

Attempts by the Republican minority to argue for amendments that would reduce the burden on companies were largely turned down.

Other Changes Rejected

The committee voted down an amendment with specific "reasonableness criteria" for privacy security systems. The proposal by Sen. Sam Brownback (R-Kansas) argued that no matter how secure a site, someone could hack in. While the original bill required "reasonable" measures of privacy security by e-commerce sites, Brownback said companies need "a few guidelines."

Hollings called Brownback's proposal "disturbing." The FTC, not Congress, should set guidelines for reasonable security standards, he said.

In another clear attempt to placate businesses, Sen. George Allen (R-Virginia) tried to kill the provision allowing private right of action. Sen. John McCain (R-Arizona) agreed with Allen, calling the private-right-of-action clause "a trial lawyer's dream" that would cost companies and consumers millions of dollars in litigation fees. The committee, however, voted down the amendment.

Brian Adkins, of the Information Technology Industry Council, says the bill fails to address the "real" issues of privacy. "This bill doesn't do anything to stop identity thieves," Adkins says. "It's more aimed at shaping the practices of corporations."

Lott said the private-right-of-action clause was one reason he blocked committee approval Thursday.

"This should be about privacy," Lott said. "This should not be about [causing more lawsuits]."

Also pending is a competing measure introduced in the House earlier in May by Rep. Cliff Stearns (R-Florida). His Consumer Privacy Protection Act of 2002 would require businesses to give consumers a clear "opt-out" choice for "personally identifiable information" used in e-commerce.

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