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US Policy Recommendations For Protecting Online Privacy

by Glen Shapiro,, New York

21 December 2010

The United States’ Department of Commerce has issued a preliminary report detailing initial policy recommendations aimed at promoting consumer privacy online, while ensuring that the internet remains a platform that spurs innovation, job creation, and economic growth.

The report, based on extensive public input and discussion, recognizes the growing economic and social importance of preserving consumer trust in the internet. Global online transactions are currently estimated at USD10 trillion annually. Between 1998 and 2008, the number of domestic IT jobs grew by 26% – four times faster than US employment as a whole – with IT employment projected to increase another 22% by 2018.

It is noted that a privacy framework must evolve to keep pace with changes in technology, online services and internet usage. To keep the digital economy growing, consumers need more transparency and control when it comes to the use and protection of their personal information, and innovators need greater certainty in order to meet consumer privacy expectations and the array of global regulatory requirements they face. The report recommends considering a clear set of principles, comparable to a “Privacy Bill of Rights”, concerning how online companies collect and use personal information for commercial purposes. These principles would be recognized by the US government and serve as a foundation for online consumer data privacy.

The adoption of baseline principles should, it is said, prompt companies to be more transparent about their use of consumer information; to provide greater detail about why data is collected and how it is used; to put clearer limits on the use of data; and to increase their use of audits and other ways to bolster accountability.

In considering new policies for commercial privacy, the report points out that the government should enlist the expertise of industry, consumer groups, privacy advocates, and other stakeholders. In particular, it recommends establishing a privacy policy office in the Department of Commerce.

As an initial step towards consideration of a new privacy framework, the report also considers looking at ways in which to harmonize the rules that set standards for businesses to notify customers about commercial data security breaches. This comprehensive national approach to commercial data breaches would provide clarity to consumers, streamline industry compliance, and allow businesses to develop a strong, nationwide data management strategy.

This national approach, enacted through federal law, could help to reconcile inconsistent state laws, authorize enforcement by the Federal Trade Commission (FTC), and preserve state authorities’ existing enforcement power. It emphasizes that this recommendation is not aimed at pre-empting federal security breach notification laws for specific sectors, such as healthcare.

Finally, the report further recommends that the government should review the Electronic Communications Privacy Act (ECPA) to address privacy protection in cloud computing and location-based services. A goal of this effort should be to ensure that, as technology and market conditions change, the ECPA continues to appropriately protect individuals’ privacy expectations and punish unlawful access and disclosure of consumer data.

The Department of Commerce is now seeking additional public comment on the plan, to further the policy discussion and ensure the framework benefits all stakeholders in the internet economy.

“America needs a robust privacy framework that preserves consumer trust in the evolving internet economy while ensuring the web remains a platform for innovation, jobs, and economic growth. Self-regulation without stronger enforcement is not enough. Consumers must trust the internet in order for businesses to succeed online,” said Commerce Secretary, Gary Locke.

The FTC Chairman, Jon Leibowitz, stated that the Department of Commerce’s report is “a welcome addition to the ongoing dialogue about protecting consumers’ privacy. It places special emphasis on policies that will preserve the viability of the internet as it evolves through innovation, transforms the marketplace, and spurs economic growth. We think it will make a significant contribution to the growing and critical debate about how best to protect the privacy of American consumers.”

TAGS: compliance | business | law | enforcement | internet | United States | standards | regulation

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