By David Segal
Washington Post Staff Writer
Thursday, December 18, 1997; Page E02

The Federal Trade Commission yesterday released a report endorsing a wide-ranging set of principles on privacy-related issues drafted by the biggest players in the computerized database industry.

The endorsement is a major victory for the industry, including the well-known Lexis-Nexis online search service, which recently devised its own rules in hopes of staving off legislative oversight by Congress.

The companies have been criticized by the government and privacy rights groups for allowing access to personal information such as Social Security numbers, birth dates and driving records. In June, eight of the country's largest database companies agreed to impose greater restrictions on access to sensitive information.

The FTC has been studying those guidelines and yesterday agency Chairman Robert Pitofsky issued a report concluding that the rules are impressive enough to be given a chance to work without additional action by Congress.

"This is an outstanding effort toward self-regulation and we hope that other industries will pay attention to these principles when devising their own standards," Pitofsky said at a news conference.

With the proliferation of computers and rising popularity of the Internet, the accessibility and misuse of personal information has emerged as an urgent issue in the past year and a half. Lexis-Nexis highlighted the issue in June 1996, when it briefly made available Social Security numbers through one of its people-finder services.

The subsequent firestorm caught the attention of legislators, who asked the FTC to investigate and determine if new laws were necessary. The industry beat the FTC to the punch when it published its own rules in June.

Some privacy rights groups criticized those rules yesterday, arguing that they do little to punish companies that fail to comply. Pitofsky voiced other concerns, contending that the principles were imperfect and leaving open the possibility of legislative attention by Congress.

Industry leaders, however, hailed the FTC's overall approval, arguing that the rules have genuine teeth and that legislation would be ineffective

To ensure compliance, the group said it would agree to an annual audit by a third party, the results of which would be made public. Further, the 14 companies agreed they would not sell information to any organization that did not comply with the principles.