FTC considers online 'do-not-track' option for consumers

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Federal Trade Commission Chairman Jon Leibowitz told members of the Senate Commerce, Science and Transportation Committee that his agency is considering various ways to improve consumer privacy protection and transparency about companies' use of online customer data.

Leibowitz also reportedly told senators that the FTC is considering a “do-not-track” list, similar to the national Do Not Call Registry, to allow consumers to opt out of having their web data collected for marketing purposes.

The FTC will release a report on the subject later this year, after taking into account reaction from consumer roundtables and other feedback, said Leibowitz.

“In its upcoming report, the commission will discuss ways to improve the disclosure in privacy policies. One possible approach is the use of standardized terms or formats. Clearer, more standardized privacy disclosures could allow consumers to compare the privacy protections offered by different companies and potentially increase competition on privacy practices,” Leibowitz said, according to testimony provided by the FTC.

“Further, unbeknownst to many consumers, companies such as data brokers collect and sell such aggregated data on a routine basis,” he said. “The commission continues to believe that requiring affirmative express consent for material retroactive changes to how data will be used is an essential means of maintaining transparency.”

A FTC representative could not be immediately reached for comment.

Prospective legislation has moved consumer data privacy to the center of marketers' radar in recent months. Rep. Bobby Rush (D-IL) introduced the Best Practices Act earlier this month, which would require websites to obtain opt-in permission from consumers before sharing consumer data with third parties. Reps. Rick Boucher (D-VA) and Cliff Stearns (R-FL) released a draft discussion of legislation in May that would codify numerous industries' use of consumer data on the web.

Marketers and industry groups vowed to fight the Boucher-Stearns draft. NetChoice, an industry coalition counting AOL, eBay and Yahoo among its members, said the draft would violate the First Amendment, while Linda Woolley, EVP of government affairs for the Direct Marketing Association, said it would “pretty much kill direct marketing as we know it.”

Jerry Cerasale, SVP of government affairs at the DMA, said his group supports the FTC's plan to encourage industry self-regulation, but added that a “do not track” list would only hurt the economy.

“Any ‘do not' national list doesn't work and undermines the basis of the Internet as we know it now, in terms of free content and companies being able to monetize the Internet,” he said. “Self-regulation is the way to go. Some really restrictive legislation would harm American companies' position as well.”

Julius Genachowski, chairman of the Federal Communications Commission, told the Senate panel that his agency has found that existing consumer data standards can puzzle consumers.

“The National Broadband Plan reviewed the current regulatory landscape regarding online privacy and found that the existing framework, in some cases, is confusing and would benefit from increased clarity,” he said, according to statements provided by the FCC.

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