Companies should also provide customers with choices about how their data is collected and shared, the report said. Those choices should come at the time and in the context of decisions consumers are making -- "not after having to read long, complicated disclosures that they often cannot find," the FTC said in a press release.

Companies should not, however, have to seek consumer permission to collect data for some commonly accepted practices, such as product shipping, internal operations and fraud prevention, the FTC report said.

In addition, online companies should look to create shorter and standardized privacy policies that are easy to understand, the FTC report recommends.

The IDG News Service