Lawmakers Unveil Online Privacy Legislation

Published on

Consumer and privacy
groups call the draft bill weak on privacy

Two U.S. lawmakers have released a draft bill that would
require companies that collect personal information from customers
to disclose how they collect and share that information, but several
privacy and consumer groups said the proposal would legalize
current privacy violations online.

The draft legislation, released Tuesday by Representatives Rick
Boucher, a Virginia Democrat, and Cliff Stearns, a Florida
Republican, would apply to information collected online and off. The
bill would require companies collecting personal information
to allow customers to opt out of the collection, and would require
companies to get permission before sharing customers’ personal
information with third parties.

"Our legislation confers privacy rights on individuals, informing
them of the personal information that is collected and shared
about them and giving them greater control over the collection, use
and sharing of that information," said Boucher, chairman
of the House Energy and Commerce Committee’s Subcommittee on
Communications, Technology, and the Internet, in a statement.
"Our goal is to encourage greater levels of electronic commerce by
providing to Internet users the assurance that their experience
online will be more secure."

But several privacy and consumer groups, including the Consumer
Federation of America, the Electronic Frontier Foundation
and the Electronic Privacy Information Center, criticized the bill,
saying it would codify current online privacy practices
that exist more for the benefit of companies than customers.

"No bill would be better than this bill," Evan Hendricks, editor and
publisher of the Privacy Times newsletter, said during
a press conference.

The bill would put into law a weak privacy practice pervasive online
today that allows companies to collect personal data
if they give notice and, in some cases, get consent, added John
Simpson, director of the Google privacy and accountability
project at Consumer Watchdog.

"I can’t really say very much good about it," he said. "This bill
really adopts a bankrupt notice-and-consent regime that
we all know does not work."

The consumer and privacy groups also complained that the bill would
prohibit states from passing their own online privacy
bills, prevent individual consumers from filing lawsuits against
companies that don’t protect privacy, and allow companies
to keep personal information for up to 18 months.

"Please explain why a marketer would need to keep your information
for 18 months," said Michelle De Mooy, senior associate
for national priorities with Consumer Action.

Consumer Action praised the lawmakers for taking a first step toward a
privacy bill. "But this bill is not the answer," De
Mooy added. "Consumers are getting angrier and angrier, and we hear
from them all the time about companies hiding under privacy
policies to get to their personal information."

Companies would not need opt-in permission to collect operational or
transactional data such as Web logs or cookies under
draft bill
. However, companies would also need opt-in consent to
collect sensitive information such as medical records, Social Security
numbers, information about sexual orientation and precise
geographical location.

With the exemption for operational data, companies could collect
almost any personal information without stronger safeguards,
Simpson said.

The draft bill would require companies collecting personal
information to display understandable privacy policies. The bill
would exempt online companies from getting opt-in permission to share
personal information with third-party advertising networks
if there was an easy-to-find link to a personal profile page where
customers could change their advertising preferences or
opt out.

The draft bill is "thoughtful and a good starting point" for a
discussion about online privacy, said Michael Zaneis, vice
president for public policy at the Interactive Advertising Bureau
(IAB), a trade group representing online advertising networks.
He praised the bill for including a provision to launch a federal
educate campaign on consumer privacy.

But IAB also has some questions about the proposal, because it
appears to expand the definition of personal information to
include IP addresses and cookies, and appears to require online
companies to get opt-in permission to collect that information
when sharing it with third parties, he said. Web sites often pass
that data between them, he said.

"We’ve never regulated cookies and IP addresses and treated them as
if they were personally identifiable," he said.

The data collection notice requirements in the draft legislation are
also extensive, and some Web publishers may know how
third-party sites handle some information, he said. "I’m worried
about first-party Web site obligations under the bill," Zaneis
said. "We need to make sure that we have appropriate obligations on
appropriate parties here."

While the consumer and privacy groups attacked the draft bill as too
weak, the Progress and Freedom Foundation (PFF), an antiregulation
think tank, complained that the bill could damage the online
advertising market and result in less free online content for

"By mandating a hodge-podge of restrictive regulatory defaults,
policymakers could unintentionally devastate the ‘free’ Internet
as we know it," the PFF said in a statement. "Because the digital
economy is fueled by advertising and data collection, a
‘privacy industrial policy’ for the Internet would diminish consumer
choice in ad-supported content and services, raise prices,
quash digital innovation, and hurt online speech platforms enjoyed by
Internet users worldwide."

Lawmakers should first find "specific consumer harm that requires
government intervention," the PFF added.

Fears that a strong privacy bill would kill online advertising are
overstated, countered Jeffrey Chester, executive director
of the Center for Digital Democracy.

"The industry wants to frame this debate in a very narrow,
self-serving way, suggesting that if you protect privacy, you will
curtail online advertising," he said. "The industry is using this
threat that the Internet will go dark, will go bankrupt,
if consumer privacy is protected. It’s a disingenuous, twisted and
fallacious argument."

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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