Can Online Marketers Be Trusted to Police Privacy Without Feds Oversight

As industry players advance the self-regulatory approach, lawmakers question whether all can be fully trusted to responsibly police their own data collection and if legislative remedies are thereby necessary to really protect consumer privacy on the Web.

By Kenneth Corbin
Fri, June 29, 2012

CIO — With industry players aligning around a set of self-regulatory principles meant to protect consumer privacy on the Internet, some lawmakers are wondering if online marketers and other Web players can be trusted to responsibly police their own data-collection operations.

At a Senate hearing this week, commerce committee Chairman John Rockefeller (D-W.V.) gave air to those concerns, suggesting that lawmakers might have a role to play legislating privacy protections in spite of the efforts that industry groups have been making and the guidance that has emerged from a pair of reports from the executive branch.

"I recognize that consumer information is the currency of the Web," Rockefeller said. "Thanks to advertising revenue, much of the rich content of the Internet is available to consumers for free. I also understand that advertising is more effective and valuable to companies when it is tailored to match consumers' individual interests and tastes. But there has to be some balance. Consumers should have some degree of control over their personal, often sensitive, online information."

DAA privacy self-regulation / online consumer privacy

The hearing came amid the backdrop of an ongoing drive to implement effective self-regulation led by the Digital Advertising Alliance (DAA), a consortium of industry trade groups and member companies working to implement standard practices allowing consumers to opt out of data-collection programs and offer more visibility into what information is collected and how it is used.

Meantime, the White House and Federal Trade Commission have each issued their own sets of guidance about privacy best practices, variously calling on industry members to offer more meaningful notice to consumers about their privacy policies and implement a so-called do-not-track mechanism.

Rockefeller noted the news this week that the travel site Orbitz would begin offering different product listings to consumers depending on the type of computer they are using. So Mac users, which Orbitz has identified as a more affluent demographic, would be shown pricier travel options than visitors using a PC.

That announcement, Rockefeller said, "should remind all of us that companies will always be tempted to misuse the consumer information they collect."

Rockefeller said he was pleased that member companies of the DAA would offer consumers the ability to opt out of their online tracking programs, but took issue with the exemptions relating to activities concerning "market research" or "product development."

"These exceptions are so broad, they could swallow the rule," he said. "'Market research' and 'product development' could encompass almost anything."

Bob Liodice, president and CEO of the Association of National Advertisers, a member of the DAA, argued that certain tracking methods are necessary to support cybersecurity and curb fraud, while other limited marketing activities have won the blessing of Federal Trade Commission Chairman Jon Leibowitz and staffers.

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