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Federal Trade Commission Issues Aggressive New Proposals on Online Privacy 

In a far-reaching effort to regulate and restructure online behavioral advertising, the Federal Trade Commission has released its long-awaited report on online consumer privacy. Of particular concern is the Commission’s strong support of a “Do Not Track” list, the first official government endorsement of such an effort.

The Commission recommends "a simple, easy-to-use choice mechanism for consumers to opt out of the collection of information about their Internet behavior for targeted ads." The report suggests that the most practical method for such a list might involve "the placement of a persistent setting, similar to a cookie, on the consumer’s browser signaling the consumer’s choices about being tracked and receiving targeted ads."

David Vladek, Director of the FTC Bureau of Consumer Protection, has noted that the Commission itself does not have the authority to institute a “Do Not Track” list. Instead, the report appears designed to invite Congress to enact a law creating a “Do Not Track” list.

While the FTC report acknowledges that the industry has made strong efforts to address privacy through self-regulation, it suggests that these “have been too slow, and up to now have failed to provide adequate and meaningful protection.”

4A’s Position

Nancy Hill, President-CEO of the 4A’s, said “There is little understanding in the report of how complex a task it is to point such a vast, diverse and rapidly changing ecosystem in the same self-regulatory direction. The new program, devised by industry, through two years of hard work, is just now becoming operational. We believe that the new system will provide a very strong case for self-regulation and consumer protection as the roll-out becomes 100% functional.”

More information on the industry self-regulation initiative.

“At its worst, the report could be read as an effort by regulators to push Congress into enacting stringent new laws that would restrict marketers’ interaction with consumers,” suggested Dick O’Brien, head of the 4A’s Washington office.

The 4A’s and other marketing groups will provide reaction to the report to the FTC during the “comment period” which ends on January 31. At that time the Commission will assess industry and consumer reactions and release their final report sometime in the summer or early Fall.

“More immediately,” O’Brien added, “we will be meeting with Members of Congress to let them know what we are doing already and what the new industry efforts will mean to consumers. We agree: online marketing must provide transparent, simple and consumer-friendly options.”

Specific Recommendations

Among specific suggestions, the FTC staff recommended that:

  • Companies adopt a “privacy by design” approach by building privacy protections into their everyday business practice, including reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy.
  • Consumers should be presented with simplified choice about collection and sharing of their data at the time and in the context in which they are making decisions. These would include a “Do Not Track” option.
  • Marketers should adopt measures to improve transparency of information practices, including consideration of standardized notices that allow the public to compare information practices of competing companies.
  • Consumers should have “reasonable access” to the data that companies maintain about them, particularly for non-consumer entities such as data brokers.
  • Stakeholders should undertake a broad effort to educate consumers about commercial data practices and the choices available to them.

See the complete report, “Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers” on the FTC Web site.

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