The End of 2010 Marks Significant Developments in Online Privacy Initiatives

Although online tracking and data collection has largely been a self-regulated industry in the United States, recent developments suggest lawmakers are re-evaluating consumers’ right to privacy with respect to their personal information. New policy initiatives will drastically impact the way advertisers collect, use and disclose consumer information. All companies with a web presence should be aware of developments in this area to ensure their company’s name stays out of the headlines for violating consumer trust and new policies.

-December 1, 2010 – The Federal Trade Commission (FTC) issued a proposed framework for the protection of consumer privacy that calls for, among other things, the development of a “Do Not Track” system, notification to consumers of a company’s intent to use data in any way that is not commonly accepted, clear and concise privacy policies, and reasonable consumer access to the data collected about them. Although consumer advocates have expressed support for the report, the online ad industry claims consumers will lose the benefit of customized content and access to free content paid for by advertising. The FTC is seeking comments on its recommendations through January 31, 2011 and expects to issue a final report in 2011.

-December 7, 2010 – Microsoft Corp. announced that the next version of its browser, Internet Explorer 9, will include “Tracking Protection,” a privacy feature allowing users to stop websites and tracking companies from gathering their information online. Microsoft decided not to include a similar feature in Internet Explorer 8 because of concerns about alienating advertisers. Internet Explorer 9 is scheduled to be released in 2011.

-December 16, 2010 – The U.S. Department of Commerce issued a report outlining a framework of proposed commercial data privacy policies. The report recommends certain Fair Information Practice Principles (FIPP), which would require companies to ask permission to use consumer data and submit to privacy audits. The report proposes making the FIPP “voluntary but enforceable,” meaning that companies could voluntarily choose whether to adopt the code, and, once adopted, the code would be enforceable by the FTC against those companies. In exchange, companies that adopt and adhere to the FIPP would qualify for a safe harbor from enforcement actions. The report also calls for the creation of a Privacy Policy Office to coordinate online privacy policy, both domestically and abroad, and the development of a national data security breach notification law. The report is expected to serve as a guide for lawmakers, who are likely to debate privacy legislation in 2011.

-December 20, 2010 – The Mobile Marketing Association announced it will develop a set of mobile privacy guidelines to protect smartphone users from tracking technologies. The guidelines are expected to cover marketing via text message, email and voice, as well as mobile websites and apps.

Currently, it is uncertain whether the federal government will ultimately adopt “voluntary but enforceable” guidelines or specific laws and regulations for the use of consumers’ data, but the emphasis appears to be shifting away from pure self-regulation towards greater government oversight.

If new regulations based on the FTC and Department of Commerce guidelines are adopted, it will change the way consumers and companies experience the web. Consumers will have access to clear notices about their data and will have the ability to proactively decide how it’s used, but these developments may frustrate them if it slows their online transactions. Companies will have to make investments in infrastructure to comply with new training, encryption and storage requirements, and to comply with an entirely new regulatory scheme in an area that has been largely un-regulated in the past. Companies that stay informed will be able to influence developments in this area, through comments to regulators and lobbying efforts, and can act quickly to comply with changes in the law, which can be used to show consumers that they are both cutting-edge and consumer friendly.

Allison Mason practices technology law in the business practice group at Rogin Nassau LLC in Hartford, Connecticut. The opinions expressed here are her own.