Online privacy policies need to be easier to understand and more conspicuous because few people now actually read them, said panelists at a U.S. Federal Trade Commission workshop on targeted online advertising.

While privacy policies can help users understand what personal information is being collected, they often need "college-level reading skills" to understand them, said Lorrie Faith Cranor, a Carnegie Mellon University computer science professor who's done research on privacy policies.

Cranor suggested FTC action may be necessary to help standardize privacy notices online. "We should look at the whole picture and think, 'Do we need nutrition labels for privacy?'" she said during the second day of an FTC workshop examining concerns about targeted online advertising.

Representatives of Microsoft, Google and Yahoo told audience members they're working to make privacy policies easier to understand and notices about data collection more immediate.

Representatives of eBay and Yahoo said their companies are experimenting with small question-mark shaped links on targeted ads that explain why a customer was shown the ad.

Microsoft tries to provide frequent links to its privacy policy, and makes it available every time customers sign up for a service, said Peter Cullen, chief privacy strategist at Microsoft. "Now, do we make sure they have to scroll through the short-form [privacy] notice?" he said. "No, because in all honesty, our customers have said that's overdoing it."

But Esther Dyson, Internet policy commentator and founder of EDventure.com, called on online advertising companies to use the same "brilliance" they have for delivering targeted ads to deliver targeted privacy policies and data-collection warnings to individual Web users.

Static privacy polices have limited appeal, she said. "I don't think you can force consumers to look at this stuff," Dyson said. "If they're interested, they do click. The problem is what they can find when they click, which is mostly incomprehensible."

She called on Web sites to tell individuals specifically what information is collected about them.

But "just-in-time" privacy notices take up space, said some panelists. "Every pixel fights for its life," Cullen said.

Joel Winston, associate director of the FTC's Division of Privacy and Identity Protection, opened the second day of the e-behavioral workshop by asking whether privacy notices could be made better, or whether they just don't work.

The IDG News Service is a Network World affiliate.