Washington Takes Up Internet Privacy

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Two senior U.S. senators are expected to introduce Tuesday legislation to establish an Internet consumer bill of rights, moving the needle in the burgeoning debate over how to protect individuals without impeding one of the country's few growth sectors.

The bill, by Sen. John Kerry, Democrat of Massachusetts, and Sen. John McCain, Republican of Arizona, would create the Commercial Privacy Bill of Rights, and if passed it would force companies to give consumers more control over how their personal information is collected, and possibly sold to third-party outfits. It would also require companies to tell consumers when privacy policies change. And companies would also have to give consumers an easy way to "opt out of having their data collected, and potentially sold. "This is a step in the right direction," says Marc Rotenberg, president of the Electronic Privacy Information Center, a nonpartisan Washington think tank.

Rotenberg points to several things that must be done to strengthen the bill. First, the bill should limit companies' ability to use loopholes for advertisers' so-called behavioral targeting — essentially, a "Do Not Track" option should be included in the bill. Legislators, Rotenberg says, should also fully empower the Federal Trade Commission to investigate and prosecute alleged cases of privacy violations. Meanwhile, Jeff Chester, executive director of the Center for Digital Democracy, a Washington consumer group, warns that the bill fails to present substantive limits on how long companies can keep consumers' data. "For some marketers," he fears, "the meaning of how long they can keep our information is forever."

Unsurprisingly, the industry wants to continue self-regulation. One example comes from the Interactive Advertising Bureau, a Washington-based group of advertisers, newspaper and magazine properties. Already, it has enlisted more than 100 companies to participate in a project to create an industry-wide, clickable icon that allows consumers to decide whether to have their online movements tracked across various websites.

The bill comes weeks after the Obama Administration, for the first time, expressed support for a consumer bill of rights, and after Congress and several states have moved to pass laws addressing the collection and sale of personal data. It's no small matter: More than half of American consumers buy products online, driving a $26 billion online-advertising industry — and the data-collection business. At supermarket check-out counters, we freely swipe plastic cards bearing our home address and increasingly permanent cell phone numbers, enabling companies to build powerful profiles of who we are. Those profiles can legally be sold to prospective employers.

The U.S. is in a race to craft Internet privacy laws. The forefront of the privacy debate isn't Washington, but Brussels. The European Union's top justice official, Viviane Reding, is moving aggressively to craft groundbreaking privacy laws, possibly as soon as this summer, that threatens the business models of U.S.-based companies like Facebook and Google. That's why those companies are quickly building a lobbying presence in Washington. U.S. government officials are watching the Europe closely: The want to protect consumers, but are weary of rushing to put too many restrictions on a growing industry.