On December 1, 2010 the FTC, the nation’s primary privacy policy enforcement agency, released a report proposing a new framework for online consumer privacy. The report attempts to balance the privacy interest of consumers, while encouraging industry innovation. “The FTC wants to help ensure that the growing, changing, thriving information marketplace is built on a framework that promotes privacy, transparency, business innovation and consumer choice,” said the FTC Chairman Jon Leibowitz.
While the FTC has the authority to provide for data protection through rulemaking, the FTC has largely subscribed to a policy of self-regulation for most industry sectors. Additionally, the United States lacks comprehensive national privacy legislation. The new report acknowledges the shortfalls to this approach and criticizes the industry’s efforts for failing “to provide adequate and meaningful protection.” According to Leibowitz, the report sends a message to the industry that “self-regulation of privacy has not worked adequately and is not working adequately for American consumers.”
The report proposes three main strategies for addressing consumer privacy concerns. First, the FTC recommends “privacy by design,” which means building privacy into business operations and creating a culture of privacy. Second, the FTC advocates for enhanced consumer choice. The FTC recommends that privacy notices focus on the “unexpected” use of consumer data and a centralized “Do Not Track” mechanism that would give consumers control over the extent to which their online behavior is tracked. “The most practical method would likely involve the placement of a persistent setting on the consumer’s browser, signaling the consumer’s choices about whether or not to be tracked,” said Leibowitz. Third, the report advocates for greater transparency through shorter, more standardized, and clearer privacy policies that would provide more meaningful notice to consumers to compare the information practices of competing companies. The report is intended to inform lawmakers as they consider whether consumer privacy legislation is necessary going forward.
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