F.T.C Seeks Privacy Legislation - 03/27/2012
The government’s chief consumer protection agency said on Monday that it intended to take direct aim at the vast industry that has grown up around the buying and selling of information about American consumers.
The agency, the Federal Trade Commission, called on Congress to enact legislation regulating so-called data brokers, which compile and trade a wide range of personal and financial data about millions of consumers from online and offline sources. The legislation would give consumers access to information collected about them and allow them to correct and update such data.
The agency also sent a cautionary signal to technology and advertising companies regarding a "Do Not Track” mechanism that allows consumers to opt out of having their online behavior monitored and shared. It warned that if companies did not voluntarily provide a satisfactory Do Not Track option, it would support additional laws that mandate it.
The recommendations, part of a sweeping set of guidelines in an F.T.C. report on Monday, represent the government’s latest move to address the issue of consumer privacy.
On one side of the debate are data brokers like Experian and Acxiom, which collect and sell information, and the huge ecosystem of technology and online advertising companies — including Google, Microsoft and Facebook — that target consumers based on their personal preferences.
On the other side are consumer groups and privacy advocates that are concerned about the volume of data being collected and how little control consumers have over that information.
The government’s Do Not Track efforts are likely to collide with the desire of companies to continue the lucrative business of collecting, using and sharing information about the people who use their services. Although these businesses say they support limits on using this information, they generally still want to be able to collect it.
One official from a prominent technology company, who declined to be named because the discussions with the government were continuing, said that "do not collect is basically death for online advertising.”
But the trade commission said unequivocally that it believed consumers who said they did not want to be tracked meant just that — no tracking at all. It said it would support legislation to require it.
"Do Not Track from our perspective certainly means ‘do not collect’ — not ‘do not advertise back,’ ” said Jon Leibowitz, the chairman of the F.TC. "If a real Do Not Track option doesn’t come to fruition by the end of the year, there will be, I don’t want to say a tsunami of support for Do Not Track legislation next Congress, but certainly a lot of support.”
The F.T.C. said it intended to work with the White House and the Commerce Department on proposals they unveiled last month to develop voluntary industrywide codes of conduct that the F.T.C. can enforce.
Mr. Leibowitz said the commission did not endorse any specific Congressional legislation, but he mentioned a bill introduced in the Senate in April 2011 by John Kerry, Democrat of Massachusetts, and John McCain, Republican of Arizona. That bill seeks to require companies to tell consumers what data is being collected and allow them to opt out of the practice.
At least two other bills have been introduced in Congress. But none of that legislation is likely to make it into law in this Congressional session, however, given the heavy schedule of pending matters and re-election campaigns.
Many data broker companies say much of the information they collect is available from public documents like property and voter registration records. Companies can sell their data to a variety of clients, including marketers, telecommunications companies, retailers and political campaigns.
Jennifer Barrett Glasgow, the chief privacy officer for Acxiom, said the focus on data brokers in the F.T.C. report was not a surprise. "It’s not an unreasonable request to have more transparency among data brokers,” Ms. Barrett Glasgow said. The company collects data from public records, surveys and consumer purchasing behavior both online and offline.
According to Ms. Barrett Glasgow, a little more than 15 percent of the company’s overall revenue is based on data sales
In an e-mail, Ines Rodriguez Gutzmer, the director of corporate communications, said Acxiom’s clients included "seven of the top eight credit card issuers, four of the top five retail banks, six of the top 10 telecom/media companies, six of the top 10 retailers, eight of the top 10 automotive manufacturers” and other industry leaders.
Gerry Tschopp, the senior vice president for public affairs at Experian North America, said Experian was still reviewing the report but said "we do provide consumers with choices, we comply with all applicable laws, follow established industry self-regulatory guidelines and use a variety of processes and procedures to safeguard consumer data.”
Michael Zaneis, senior vice president and general counsel of the Interactive Advertising Bureau, an industry trade group, said it was important that any data broker legislation not be so broad in scope that it would include "virtually every publisher site, advertiser, ad network, or analytics firm” that collects or shares data with other parties. This interconnection, he said, "makes the digital economy work. We would not want to see legislation introduced that would harm the most fundamental operations of the Internet.”
Consumer privacy advocates mostly favored the commission’s final report. "Data brokers buy, compile and sell a wealth of highly personal information about you, but there’s no way to find out what they have or if it’s correct,” said John M. Simpson, the head of Consumer Watchdog, which advocates for digital privacy. "That’s why the F.T.C.’s call for legislation in this area is so important.”
Jeffrey Chester, the head of the Center for Digital Democracy, said, "In its call for Congress to enact legislation to rein in the data broker industry, the F.T.C. has opened up an important new ‘front’ in the battle to protect consumer privacy.”
In its report on online privacy last month, the White House recommended that Internet companies that collect personal data and then sell or lease it to third-party brokers should "prominently and explicitly” tell consumers they do so and "provide consumers with meaningful opportunities to prevent these disclosures.”
The F.T.C. suggested that the guidelines should not affect small businesses that collect online data from fewer than 5,000 people and do not sell that data to third parties. It would also loosen the guidelines for companies that collect data for the purposes consistent with the context of a user’s visit to a particular Web site. For example, if a user buys something on a Web site, the company would be able to collect data on that user and would not be required to offer consumers the option to opt out of data collection.
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