"Picture this : You need to send an advance copy of your company's annual earnings to your accounting firm. Security is a must, so you encrypt it and e-mail it to the bean counters. Uh-oh—Johnny Law comes knocking. Turns out your accountant is being investigated for fraud, and the feds want access to the mystery file you sent. You refuse. After all, it's no business of the government's. Surprise—you're headed for prison."

The scenario is more likely than you might think, with recently proposed legislation overseas threatening to make failure to decrypt any file on request punishable by two years in the slammer. Furthermore, the United Kingdom's Electronic Commerce Bill states that if you tip off somebody that he or she is under any kind of electronic investigation, it's five years of jail time. All because you wanted to protect your confidential information.

And this isn't just a foreign issue. It could happen right here at home.

U.S. legislation intended to relax encryption hassles, especially regarding its export, has been languishing in committee after committee for years. Virginia Republican Bob Goodlatte introduced the original bill to allow the export of strong encryption that is already available overseas. It would also limit the U.S. government's ability to require programs for domestic use to have back doors that would give law-enforcement officials access to encoded data.

But such an innocuous bill faces strong opposition from the likes of Attorney General Janet Reno, FBI director Louis Freeh, and President Clinton himself, who fear that loosening export restrictions would put security products into the hands of international criminals. It is often highlighted, to little avail, that the same products are already available from non-U.S. producers. Meanwhile, a San Francisco U.S. Appeals Court has struck down the existing export limits as a violation of the First Amendment, but this decision is pending yet another appeal.

Encryption may be even more critical if Clinton's plan to create a national computer security system to monitor and prevent computer hacking comes to fruition. Not only would this plan monitor popular hack targets like the Pentagon and the CIA, but it would also screen certain as-yet-undefined private-industry computers. The gist of this is that your company's private transactions with another company may very well be subject to electronic eavesdropping. Clinton wants this system in place no later than 2003.

Encryption, online privacy, and freedom of speech have already been threatened by legal actions over anonymous comments. Lilly Industries is the latest company to get litigious with faceless critics. In this case, five people who posted unflattering statements about Lilly management on Yahoo.com's finance message boards are under attack. And Yahoo.com has been more than compliant about turning over confidential subscriber data under subpoena—without notifying its subscribers. For more about this issue.

Online privacy has never been threatened to the extent it is today, and signs point to the problem getting worse before it gets better. Meanwhile, protect your critical data and e-mail transactions with the strongest encryption you can get , P.G.P. , write your congress-person to support the Goodlatte Bill, and above all, avoid defamatory statements in so-called anonymous forums.

"If the Internet has taught us anything, it's that there's no such thing as online anonymity."