Friday, July 30, 2010

FTC Addresses Consumer Privacy at Congressional Hearings

This posting was written by Cheryl Beise, Editor of CCH Guide to Computer Law.

The Federal Trade Commission recently appeared before two congressional committees to testify about FTC efforts to protect consumer privacy.

Chairman Jon Leibowitz appeared before the Senate Commerce, Science, and Transportation Committee on July 27 and David Vladeck, Director of the FTC’s Bureau of Consumer Protection, appeared before the Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and Commerce on July 22.

The testimonies described the FTC’s actions to hold companies accountable for protecting consumer privacy (focusing on data security, identity theft, and children’s privacy) and protecting consumers from intrusive spam, spyware, and telemarketing.

The FTC has brought 28 actions charging businesses with failing to protect consumers’ personal information, 15 actions charging website operators with collecting information from children without parents’ consent, 15 spyware cases, and dozens of actions challenging illegal spam, including an action against a rogue Internet Service Provider that resulted in a temporary 30 percent drop in spam worldwide.

In addition, the FTC brought 64 actions alleging violations of the Do Not Call Rule, resulting in violators paying almost $40 million in civil penalties and giving up nearly $18 million, including consumer redress.

New Technologies, Business Models

The testimonies also described the FTC’s recent initiatives to examine consumer privacy protection in light of new technologies and business models, including hosting a series of roundtables discussions addressing (1) integrating privacy into everyday business practices; (2) simplifying consumer choices about commercial data practices, and (3) increasing transparency of those practices.

Chairman Leibowitz said that consumers do not understand the extent to which companies are collecting, using, aggregating, storing, and sharing their personal information, particularly with regard to companies’ affiliate information sharing.

Data Use Transparency

The Commission “is considering a number of other ways to increase transparency about commercial data practices,” Leibowitz said. In an upcoming report, the Commission will discuss ways to improve the disclosures in privacy policies. One possible approach is the use of standardized terms or formats, Leibowitz said. The Commission also favors giving consumers the right to opt-in to how their data will be used.

Repeal Common Carrier Exemption

Chairman Leibowitz renewed the FTC’s request for repeal of the telecommunications common carrier exemption from the FTC Act. Currently, the FTC Act exempts common carrier activities from the FTC Act’s prohibitions on unfair and deceptive acts or practices and unfair methods of competition.

House Legislation

David Vladeck expressed the FTC’s general support for two legislative proposals—H.R. 5777 (the “BEST PRACTICES Act”) and a discussion daft of legislation to require consumer notice and consent regarding collection and use of personal information.

H.R. 5777, the Building Effective Strategies To Promote Responsibility Accountability Choice Transparency Innovation Consumer Expectations and Safeguards Act (the "BEST PRACTICES Act"), was introduced by Bobby Rush (D-IL), Chairman of the Subcommittee on Commerce, Trade, and Consumer Protection, on July 19, to foster transparency about the commercial use of personal information. The text of Chairman Rush’s BEST PRACTICES Act can be found here.

The discussion draft of legislation proposed by Rick Boucher (D-VA), Chairman of the Subcommittee on Communications, Technology, and the Internet, would require consumer notice to and consent prior to collection and use of personal information. The text of Chairman Boucher's discussion draft bill can be found here.

The FTC supported overlapping provisions in both proposals’ concerning data security and accuracy, simplification of consumer choice in determining collection and use of personal information, and enhanced FTC rulemaking authority. David Vladeck also urged Congress to (1) require standardized, clear disclosures to enable consumers to compare privacy protections, (2) ensure that disclosures be given at the time of relevant transactions, and (3) not necessarily exempt business affiliates from consent requirements.

Chairman Leibowitz’s Senate testimony is available here. David Vladeck’s House testimony is available here.

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