Privacy Bill Contention Evident at House Hearing

At a House subcommittee hearing today, business and consumer groups discussed two privacy bills, revealing key areas of contention that could significantly affect online advertisers. Among the sticking points: FTC rulemaking authority, the ability for private individuals to sue alleged violators, data sharing, and safe harbor for corporations.

Both pro-business witnesses and privacy advocates suggested that a bill introduced Monday by Rep. Bobby Rush represented progress on an issue Congress has poked into for over two years now.

A draft bill floated by Rep. Rick Boucher since May and Rush’s follow-up legislation officially introduced Monday call on the Federal Trade Commission to be the regulatory guide and enforcement authority associated with rules put into place by the potential privacy law.

“I think we need to be very careful about the latitude that we give the FTC in this area,” said Rep. Ed Whitfield, ranking member of the Subcommittee on Commerce, Trade, and Consumer Protection, the body that hosted today’s hearing. Rush chairs that subcommittee.

David Vladeck, director of the FTC’s Bureau of Consumer Protection, said the commission would not take a position on the Boucher draft or Rush bill. However, he said the commission supports requirements for data security, for mechanisms allowing users to view and alter data associated with their profiles, and for simplification of privacy choice. He also asked legislators to consider giving the FTC rulemaking authority to provide guidance on such issues.

Vladeck also said, “It would be useful to require short disclosures at the point of information collection and or use.” (A coalition of ad industry groups is developing a self-regulatory system for notifying consumers when they are delivered ads that have been targeted based on behavioral data, but the system is not intended to notify consumers at the point of data collection.)

Along with Rep. Whitfield, representatives from Intel, the U.S. Chamber of Commerce, and the Interactive Advertising Bureau expressed concern about allowing private individuals to take legal action against corporations they allege to be in violation of the would-be privacy law. While the Rush bill includes this provision, the Boucher draft does not, to the chagrin of privacy advocates who have stressed the need for private citizens to sue firms they believe violated their privacy rights.

Still, privacy groups indicated the Rush bill, referred to as Best Practices Act, does not go far enough. “While the Rush bill grants very limited private rights of action for certain willful violations (a high standard), why not give consumers full legal rights to enforce the law?” inquired a hearing testimony submitted by Center for Digital Democracy, Consumer Federation of America, and U.S. Public Interest Research Group.

There also is disagreement over data transfer provisions. The three aforementioned privacy groups praised the Rush bill for restricting transfer of consumer data to third parties. While IAB supports opt-outs for data transfer to third parties for advertising and marketing purposes, the organization said in its testimony that it opposes opt-in requirements for data transfers to unaffiliated third-party publishers, arguing it would drastically slow the engines of online commerce.

The FTC’s Vladeck said he wasn’t sure whether data sharing among companies that are affiliated through common ownership should be exempt from the requirements.

Vladeck also suggested that safe harbor provisions – spelled out more clearly in Rush’s bill and seen by the IAB as a concession to the industry’s self-regulatory program – could lead to multiple consent mechanisms, and “could add to consumer confusion.” Indeed, there are already two versions of icons that industry could ultimately use to alert consumers to behaviorally targeted ads.

The timing of the conversation was of particular importance. The only bill of the two under discussion that has been officially introduced – the Rush bill – was submitted Monday afternoon. Some subcommittee members and hearing witnesses expressed frustration with the fact that they only had a few days to digest that bill, H.R. 5777.

“I regret we’re having a hearing only four days after the bill was formerly released,” said Rep. Cliff Stearns, co-sponsor of the Boucher draft. In response, Rush indicated he would balance moving too quickly on the bill with the need to begin the legislative process in a robust way.

UPDATE: This story originally stated that the hearing took place “yesterday,” meaning July 21. It was changed to state that it took place on July 22.

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