Commerce Department tackles online privacy


The Commerce Department proposes creating a new office to oversee online privacy.

Aiming to set ground rules for companies that collect personal data online and use that information for marketing purposes, the U.S. Commerce Department is calling for the creation of an online privacy “bill of rights” for internet users.

The proposal, outlined in a Commerce Department report issued Dec. 16, is intended to address growing unease about the vast amounts of personal data that companies are scooping up on the internet, from web browsing habits to smart phone locations to Facebook preferences. The information often is mined to help companies better target their advertising—a practice that has children’s advocacy groups in particular calling for more online privacy safeguards.

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The Commerce Department proposal is intended to guide lawmakers, industry executives, and a White House group looking at issues of online privacy and internet policy.

It comes two weeks after the Federal Trade Commission recommended the creation of a “Do Not Track” tool to let consumers stop or restrict advertisers from studying their online activity—including the websites they visit, the links they click, their internet searches, and their online purchases—in order to target ads.

The new Commerce Department report proposes the creation of a broad framework for industry behavior to ensure that companies give consumers clear notice about what personal data they are collecting and exactly how they are using this information.

The Commerce Department proposal would give consumers the opportunity to “opt out” of, or decline, some or all of that data collection and to correct errors in the information. It also would set clearer limits on the use of this information and would require companies to secure the data they gather.

These so-called “fair information principles” would require legislation before they become binding.

In addition to these broad principles, the Commerce Department also envisions specific codes of conduct for particular segments of cyberspace. Those could include social networking websites, services that deliver location-based pitches to mobile devices and web publishers, and marketers that target ads based on a consumer’s browsing activity and other online behavior.

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Those codes of conduct would be voluntary, but enforceable. The FTC could take actions against companies that commit to abiding by the codes and then don’t comply, the Commerce Department proposal says.

In what could become one of the more controversial elements of the Commerce Department plan, the codes of conduct would be developed by internet advertising networks, web publishers and marketers, social networking websites, and other online services, as well as government officials, consumer groups, privacy watchdogs, and others concerned about online privacy.

Those groups would work together under the guidance of a new online privacy office to be created within the Commerce Department. The office would work with the FTC, the White House, and other federal entities.

James Steyer, CEO of the children’s advocacy group Common Sense Media, issued a statement applauding the Commerce Department’s report but suggesting that even more needs to be done to protect the online privacy of children and teens.

“Online privacy is a huge concern for Americans, and it is important that agencies are taking the issue seriously,” Steyer said. “We can’t expect consumers to continue making purchases online unless they are confident that their privacy is being protected, which isn’t the case today.”

He added: “The Commerce Department’s idea of creating a privacy policy office is a good one, and it’s a long time coming. Canada and Europe already have privacy officers responsible for constantly working with key stakeholders to keep privacy policies up to date with ever-changing technologies. This position would be an important step forward in protecting the privacy of consumers in this country, especially our youngest consumers—kids and teens, who also need new laws and broader protections to keep their personal information safe—and we believe it is something that the industry should fully support.”

Common Sense Media launched an online privacy campaign in October with a challenge for industry leaders, policy makers, educators, and parents to safeguard kids’ privacy online.

The Commerce Department report, which has been approved by the White House, is intended to guide internet companies and marketers, as well as lawmakers and policy makers, as they develop a new framework to safeguard online privacy without stifling internet commerce.

It also will inform the work of a group on online privacy and internet policy that was created inside the White House’s National Science and Technology Council in October and shares the same goal.

“America needs a robust [online] privacy framework that preserves consumer trust in the evolving internet economy, while ensuring the web remains a platform for innovation, jobs, and economic growth,” Commerce Department Secretary Gary Locke said in a statement. “Consumers must trust the internet in order for businesses to succeed online.”

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Commerce Department officials hope their report also will lay the groundwork for discussions with foreign governments to align global standards for acceptable industry behavior. The European Union, for one, has said it plans to update its online privacy regulations to give consumers more control over their personal data.

The Commerce Department report does not take a position on the FTC’s Do Not Track proposal, which is at the center of a debate over how to give consumers more control over their personal data online. The tool most likely would take the form of a browser setting that would let consumers signal to websites that they do not want to be tracked or want only limited tracking.

Although privacy watchdogs have welcomed the FTC’s proposal, the online advertising industry has warned that allowing consumers to turn off all online tracking could have unintended consequences because tracking is used to deliver all sorts of personalized web content—from sports scores to stock prices—and not just internet ads.

The Commerce Department also recommended national standards on data breaches, requiring companies to adopt strong measures to protect electronic records and notify consumers in the event of a breach. And it called for a review of the Electronic Communications Privacy Act, a 1986 law that extended wiretapping restrictions to eMail messages and other data files but is now considered out of date.

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