Once the Internet looked like an all-American small town. The neighbors had no reason to lock their doors, they knew each other and often just dropped in for a visit.

Nearly three decades later, the Internet has become an appliance for everyday life, accessible to everyone from anywhere -- with an estimated 40 million users worldwide, resembling the city of Los Angeles. And if Los Angeles residents are using alarms, heavy duty locks, private security and dogs to protect their belongings, is it any wonder that Internet users employ antivirus software, firewalls and encryption to protect their data and privacy?

No other area of the Internet has experienced quite as much attention as security and for good reason. For example, an anonymous organization recently sent e-mail to 2,300 customers of ESPN Sportszone and NBA.com -- two of the most popular Web sites -- saying that their credit card numbers had been accessed. The message included the last eight digits of the recipients' credit card numbers. Both quickly upgraded their security systems.

Clearly, security concerns are the number one challenge to the acceptance of electronic data exchange. Online transactions promise to become an increasingly important component of state and national economies. By the year 2000, electronic commerce is predicted to become a component of the economy worth tens of billions of dollars. However, security concerns must be allayed first.

Fortunately, recent technologies, together with several bills under consideration by Congress, promise more secure solutions.

According to the Clinton administration's A Frame for Global Economic Commerce, there are five basic principles of information security. They include: privacy, integrity, authenticity, confidentiality and nonrepudiation.

Privacy

In case you haven't heard, some Web sites you visit install a "cookie," which basically spies on you, reporting back to the original Web site when you visit it again. Cookie files compile data on which Web sites you visit, and choices you make. Other personal information can also be extracted, according to some sources. And that's only one example of new, technology-based invasions of privacy.

In an increasingly networked and nosy world, Americans have begun demanding careful and responsible management of electronic data. A Frame for Global Economic Commerce suggests privacy principles that rest on the fundamental precepts of awareness and choice:

* Data-gatherers should inform consumers what information they are collecting, and how they intend to use such data.

* Data-gatherers should provide consumers with meaningful ways to limit use or reuse of personal information.

Recently, concerns have arisen over information collected from children. The Federal Trade Commission requires companies that operate Internet Web sites to obtain parental consent before releasing data on children to a third party. However, there is no way to verify compliance.

A bill introduced by Rep. Billy Tauzin (R-Louisiana), chairman of the House Commerce Committee's telecomunications subcommittee, would bar companies from disclosing, or using without consent, medical and financial records -- as well as government information such as Social Security numbers -- that are available online.

Privacy Products

Luckman Interactive's Anonymous Cookie for Internet Privacy offers an "anonimizer" mode that, according to the company, immediately disables all cookie directories or files, giving users more control over their privacy. According to Luckman Interactive, users can switch to this mode by simply clicking on the program's icon and selecting the desired mode. The anonimizer is still in beta version. For further information, contact

www.luckman.com>.

Another privacy protector is a site-labeling program called TRUSTe. TRUSTe icons inform Web site visitors how the site uses or exchanges information collected from visitors. TRUSTe's premier members include: AT&T, Tandem Corp., CyberCash, Wired Ventures, Oracle, IBM, MatchLogic, Netscape, InterNex and Land's End. More information about the TRUSTe program can be found at its Web site address,