The Federal Trade Commission (FTC) preliminary staff report signed off unanimously by the agency's five commissioners was intended as a framework for balancing privacy and innovation on the Internet.

"The FTC wants to help ensure that the growing, changing, thriving information marketplace is built on a framework that promotes privacy, transparency, business innovation and consumer choice," FTC chairman Jon Leibowitz said in a statement released Wednesday with the report.

The report stated that industry efforts to address privacy through self-regulation "have been too slow, and up to now have failed to provide adequate and meaningful protection."

Recommendations include the creation of a "Do Not Track" option, perhaps built into Web browsing software, which would signal online services not to collect surfing or ad-targeting data.

"The report confirms that many companies -- both online and offline -- don't do enough to protect consumer privacy," said Democratic Senator John Kerry.

"Today's technology makes it easy for companies to obtain, collect, store, and transfer unprecedented amounts of information, but industry self regulation has proven inadequate to protect consumers."

Leibowitz warned that in addition to making policy recommendations, the FTC will take action against companies that "cross the line" with consumer data and violate consumers' privacy "especially when children and teens are involved."

While many companies manage people's private information responsibly, some appear to treat it recklessly, the report maintained.

"Industry must do better," the report stated. "For every business, privacy should be a basic consideration similar to keeping track of costs and revenues, or strategic planning."

In the wake of record US "Cyber Monday" sales in which online shopping topped a billion dollars, the FTC noted that advertisers might collect and share information about websites visited and content viewed.

Third-party applications can get access to personal information posted at online social networks, while location-based services for mobile devices promise maps of people's movements, the report contended.

Even the use of "loyalty" cards at shops or the filing of product warranty cards can provide purchase and other information to data brokers, according to the FTC.

The commission proposed that companies build consumer privacy into everyday practices by only collecting data they need and then safely deleting it after it has fulfilled its purpose.

Companies should also streamline and simplify privacy choices for people, with the most practical method being an easy-to-find Web browser switch that lets people avoid having online behavior tracked, the report said.

Web browser software currently offers "private browsing," but the FTC wants such tools made more obvious.

The FTC also wants companies to simplify typically lengthy and convoluted privacy policies that "consumers typically do not read, let alone understand."

"Earlier this year, consumer outcry caused companies such as Google and Facebook to change the privacy practices related to their social networking tools after launching new products and features," the report stated.

"A more thorough privacy review before product launch -- at the research and development stage -- may have better aligned these products and services with consumer expectations and avoided public backlash."

The FTC asked any "interested parties" to submit comments or feedback on the proposed framework by January 31 and expected to have its new policies in place later next year.

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