Chairman Hatch, Senator Leahy, and Members of the Committee, I would like to thank you for the opportunity to discuss online privacy with you today. My name is Katherine Borsecnik, and I am the Senior Vice President for Strategic Businesses at America Online.

The online medium is quickly revolutionizing the way we learn, communicate, and do business. It impacts industries as diverse as booksellers and brokers, and offers consumers unprecedented convenience. Our customers can sign on to AOL and instantaneously do research, send a letter, and find the best deal on an airline ticket - tasks that a few short years ago would have consumed far more of their time.

But the technology of the Internet offers users something even more unique: the ability to customize or personalize their online experience. Consumers can communicate specific preferences online that will allow them to receive services or information targeted to their needs. For example, an AOL member can set her online preferences to get the weather forecast for her own zip code, read news stories about her professional interests, or get a notice about the availability of a new CD from her favorite musician.

But the power of the Internet can only be fully realized if consumers feel confident that their online privacy is protected. For me, protecting our customers' privacy is essential to earning their trust, without which I cannot sustain a successful business. AOL learned this important lesson through our own mistakes not too long ago, when an AOL employee wrongly revealed one of our member's screen names to the government.

AOL has recognized that consumer trust is essential to building the online medium, and has taken a number of important steps to create a privacy-friendly environment online. Building on the lessons we've learned and the input we've received from our members, we have adopted privacy policies that clearly explain to our users what information we collect, why we collect it, and how members can exercise choice about the use of that information.

We have based our policies on core principles that reflect consumer needs and expectations. For example, we will not read a member's private email; we will not disclose to anyone any information about where a member goes online; and we will not give out a member's phone number, credit card information, or screen unless he expressly agrees. We give consumers clear choices about how their personal information is used, and we make sure that our members are well informed about what those choices are. For example, if a customer decides that he does not want to receive any marketing materials from us that are targeted to him based on his personal information or preferences, he can simply check a box on our service to let us know.

We also make sure that our policies are well understood and implemented by all our employees. We provide training about our privacy policy and require all employees to sign and agree to abide by the policy, as a condition of employment. We continually review state-of-the-art technology to ensure we use the most advanced technologies possible to defend our customer data security.

AOL takes extra steps to protect the safety and privacy of children online. We do not collect personal information from children without their parents' knowledge and consent. We have created a secure environment just for children -- our "Kids Only" area -- and we carefully monitor all of the Kids Only chat rooms and message boards to make sure that a child does not post personal information that could allow a stranger to contact the child offline. Furthermore, through AOL's "parental controls," our members are able to safeguard their children's privacy by setting strict limits on whom their children may interact with and what they see online.

In addition to adopting and implementing our own policies, AOL is committed to fostering best practices among our business partners and industry colleagues. One of the strongest examples of this effort is our "Certified Merchant" program, which guarantees that our members will be protected and satisfied when they are within the AOL environment. Through this program (which currently has 152 participating merchants), we offer a money-back guarantee program to dispel consumer concerns about shopping security and to increase consumer trust in this powerful new medium. We believe that the more we are able work with our business partners and require high standards of them, the more likely it is that these standards will become the marketplace norm.

In fact, we believe the online industry as a whole is taking positive steps toward protecting online privacy. To strengthen industry's commitment to online privacy, AOL joined with other companies and associations last year to form the Online Privacy Alliance (OPA), which has since grown to include more than 85 recognized industry leaders.

AOL believes that companies are responding to the increasing marketplace demand for online privacy, and that the tremendous growth of e-commerce reflects positive trends on a variety of consumer protection issues, including privacy. But our work has only just begun. As technology makes it easier for companies to collect and use personal information, the adoption and implementation of robust privacy policies will become even more essential.

In part, we think that technology holds the key to ensuring a safe and secure online environment. We believe it is critical for us to provide the most sophisticated security technologies to our members so that they can take steps to protect their own privacy online. That's why we will continue to advocate the widespread availability and use of strong encryption, both in this country and abroad.

The challenges that lie ahead will give us the chance to prove that industry and government can work together to promote effective online privacy. But ultimately, it is the consumer who will be the judge of whether these efforts are adequate. Because no matter how extraordinary the opportunities for electronic commerce may be, we know our business will fail if we cannot meet consumer demands for privacy protection and gain their trust.

We at AOL are committed to doing our part to protecting personal privacy online. Our customers demand it, and our business requires it. We appreciate the opportunity to discuss these important issues before the Committee, and look forward to continuing to work with you on other matters relating to the Internet and electronic commerce.