A coalition of ten consumer and privacy groups on Tuesday urged Congress to draft new legislation to preserve consumer privacy online by limiting behavioral advertising and establishing new ground rules for information collection and use.

The groups -- Center for Digital Democracy, Consumer Federation of America, Consumers Union, Consumer Watchdog, Electronic Frontier Foundation, Privacy Lives, Privacy Rights Clearinghouse, Privacy Times, U.S. Public Interest Research Group, and The World Privacy Forum -- have prepared a 13 page legislative primer spelling out proposed limitations to behavioral advertising.

The recommended changes include: protection for information that isn't necessarily "personally identifiable information"; a prohibition on the use of sensitive information related to health, finances, ethnicity, race, sexual orientation, personal relationships and political activity in behavioral tracking; a ban on behavioral data collection on children; a requirement that data collected for one purpose cannot be used for another without explicit consent; data security guarantees; and a consumer right to see, review, and correct stored data, among other suggestions.

The coalition expects members of Congress to draft a bill this fall that redefines fair information practices in light of the way data is currently collected.

The move comes two months after a coalition of advertising trade groups, perhaps sensing increased Congressional willingness to legislate, declared a set of seven self-regulatory principles to protect consumers from behavioral advertising.

The principles call for industry educational outreach, transparent data collection practices and disclosures, consumer control over collected data, reasonable security and limited data retention, obtaining consent when policies change, heightened protection for data regarding children, health, and finances, and advertiser accountability.

Self-regulation is generally preferred by companies to government regulation because compliance with industry rules is typically less costly and less restrictive of potential business models than compliance with government requirements.

But John Simpson, a project director at Consumer Watchdog, on a media conference call about the privacy coalition proposal, said, "In almost any industry, self-regulation does not work. We've seen it in the capital markets and we've seen it online."

Behavioral advertising has long been a topic of concern among legislators, though the issue has become more pressing since March when Google began testing what it calls "interest-based advertising."

Behavioral advertising uses data gathered from consumers' online activities, sometimes in conjunction with other data, to determine consumer interests and to present ads that cater to those interests. Such advertising tends to command a premium because ads tailored to viewer interests tend to perform better than ads placed with no regard to what consumers care about.

Google has acknowledged that advertising that makes use of behavioral data presents a challenging policy issue. "On the one hand, well-tailored ads benefit consumers, advertisers, and publishers alike," said Nicole Wong, Google's deputy general counsel, in a blog post in March. "On the other hand, the industry has long struggled with how to deliver relevant ads while respecting users' privacy."

"We welcome the dialogue and are supportive of greater transparency and choice for users," said Google spokesperson Christine Chen, noting that Google couldn't comment on specifics until more details about possible legislation became clear.

While Google may be the most high profile practitioner of behavioral advertising, it's companies that have pushed the privacy envelope with more controversial practices, like NebuAd and Phorm, that concern consumer groups the most.

A major goal of the privacy and consumer groups is to bring more transparency to online information collection and use, because much of what is done with consumer data is not disclosed.

On the media conference call, the representatives of the various privacy and consumer groups stressed that this isn't about killing behavioral advertising but safeguarding consumers against real and ongoing harms that are a consequence of the absence of privacy.

"The basic idea behind all of these documents is we want consumers to be able to take advantage of all of these technologies without these technologies taking advantage of the consumers," said Pam Dixon, executive director of the World Privacy Forum. "And right now that balance is not there."

"Consumer privacy can be protected while we get to enjoy the benefits of the digital marketplace," insisted Amina Fazlullah, legislative counsel of U.S. Public Interest Research Group.

Update: Corrected John Simpson quote attribution.

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