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Draft privacy bill could shake data collection

A discussion draft of what could become sweeping Internet data privacy legislation has pitted direct marketers and list brokers against privacy advocates, with some in the industry saying it will kill direct marketing. List managers and their clients especially fear harm if the draft, put forward by US Reps. Rick Boucher (D-VA) and Cliff Stearns (R-FL), becomes law.

The proposal, which could form the basis of a bill, enables consumers to take greater control over marketers’ use of their personal information. It would also require companies that collect customer information to disclose that they are doing so and how.

The draft specifies that companies may collect information about consumers, but gives consumers the opportunity to opt out of the process. It also applies to cases when a website relies on third-party services to process payment on a transaction. While companies would not need customer consent to collect information, they would need specific approval to collect sensitive information, including medical, financial or personal data such as Social Security numbers.

Jeannine Gibson, marketing director at Infocus Marketing, said that the draft “will have a far-reaching negative impact on the list rental industry.”

“If prior affirmative consent is the only allowable way for direct marketers to tell their sales, product or service story to consumers, it will… burden both data collectors and businesses who are trying to grow in an already tough economic environment,” she said, via e-mail. “If your only new prospects are the ones who have already given you permission to contact them, those really cannot be considered new prospects, can they?”

Linda Woolley, EVP of government affairs for the Direct Marketing Association, says the bill would mean financial ruin for companies that depend on revenue from the web.

“It would pretty much kill direct marketing as we know it,” she says. “There would be no list brokers, and no more list compilers, because they do what the bill prohibits. They collect and segment information; they wouldn’t be able to do that anymore without express permission.”

Rob Stanton, VP of business development at Stanton Direct Marketing, doesn’t believe such a bill would kill the industry.

“People in the retargeting business are going to be affected the most,” he says. “But it’s a little alarmist to think that it’s going to ‘kill direct marketing as we know it.'”

Stanton adds that he doesn’t think the draft will pass, and that “there are too many ambiguities about what will be done from a practical standpoint.”

“Provisions like dumping customer information after 18 months doesn’t make any sense to me,” he explains. “I think that doesn’t do much to address what the real privacy issues are.”

To consumer privacy advocates like Jeff Chester, executive director of the Center for Digital Democracy, Woolley’s views are wildly exaggerated.

“This is about ensuring a healthy online advertising marketplace, but with policies enforcing democracy,” he says. “The advertising lobby is engaging in a disingenuous attack on the bill, claiming that privacy guidelines will [bankrupt] online advertising.”

The draft also contains exceptions for third-party advertisers. Consumer opt-out consent would apply to the sharing of an individual’s information with a third-party ad network if there is a clear, easy-to-find link to a webpage that allows a consumer to edit his profile or opt out of having one.

A number of e-commerce heavyweights contacted by DMNews, including Dell, Overstock.com and Barnes & Noble declined comment on the draft legislation.

The Interactive Advertising Bureau, meanwhile, said in a statement that “the draft is a confusing document.” The group added that “legislation should not be overly prescriptive, but rather allow the industry the flexibility to innovate and discover new and more effective ways of meeting consumers’ privacy expectations.”

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