May 4, 2010, 4:51 PM

Consumer privacy bill seeks to protect against online targeting

The U.S. House Subcommittee on Communications, Technology and the Internet today released a discussion draft of proposed federal legislation that presents several rules, enforceable by the Federal Trade Commission and state attorneys general, regarding how online retailers collect visitor information and use that information to target advertising at them.

Internet Retailer

The U.S. House Subcommittee on Communications, Technology and the Internet today released a discussion draft of proposed federal legislation that presents several rules, enforceable by the Federal Trade Commission and state attorneys general, regarding how online retailers collect visitor information and use that information to target advertising at them.

“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,” says subcommittee chairman Rep. Rick Boucher (D-VA), who submitted the draft with Rep. Cliff Stearns (R-FL), the subcommittee’s ranking Republican. “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.”

Boucher says the draft bill is not intended to stifle the use of advertising content and services on e-commerce sites. “Online advertising supports much of the commercial content, applications and services that are available on the Internet today without charge, and this legislation will not disrupt this well-established and successful business model,” he says. “It simply extends to consumers important baseline privacy protections.”

Among the bill’s points:

  • Any company that collects personally identifiable information about individuals must conspicuously display a clearly-written, understandable privacy policy that explains how information about individuals is collected, used and disclosed.
  • As a general rule, companies may collect information about individuals unless an individual affirmatively opts out of that data collection. Opt-out consent also applies when a web site relies upon services of a third party, such as an ad agency that serves up ads on a company’s web site.
  • No consent is required to collect and use operational or transactional data, such as web logs or session cookies, or to use anonymous data.
  • Companies need an individual’s express opt-in consent to knowingly collect sensitive information about an individual’s medical records, financial accounts, Social Security number, sexual orientation, government-issued identifiers and precise geographic location.
  • If a company wants to share an individual’s personally identifiable information with third parties other than for an operational or transactional purpose, the individual must first grant consent for that information sharing.
  • Companies sharing an individual’s profile information with a third-party ad network could proceed with an opt-out consent policy, instead of requiring individuals to give their consent if individuals have access to an easy-to-find link to a web page where they can modify or delete their profile.

Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association, a trade group for direct marketers, said today that it was too soon to comment on what impact the draft legislation would have on online marketing and how much it would go beyond privacy policies already being worked on by the online marketing industry. But he added that the DMA and other groups would analyze the bill to see if it would have a negative impact on the ability of e-commerce companies to effectively advertise on the web.

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