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12/17/2010
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Obama Administration Urges Online Privacy Bill Of Rights

Businesses support the administration's proposal to give companies the option of following a proposed federal code of conduct for handling personal data gathered on the Web.

The Obama administration has proposed establishing a Privacy Policy Office that would develop a code of conduct for handling personal data gathered online. The rules would be enforceable among businesses that agreed to follow them.

The Commerce Department recommended forming the office as part of a framework for ensuring online data privacy. The department's Internet Policy Task Force released the framework Thursday, about two weeks after the Federal Trade Commission released a set of recommendations that would place tougher restrictions on businesses.

A major difference in the two recommendations is in how the rules would be enforced. The Commerce Department favors letting businesses voluntarily agree to its code of conduct. The Federal Trade Commission would be charged with enforcing compliance among those companies that promised to follow the rules. The FTC's recommendation went further by requiring that consumers be given a "do-not-track" option before data is gathered.

Businesses have long favored a voluntary approach versus government imposing regulations that carry fines or criminal prosecution. Supporters of the voluntary approach argue that consumers would be better protected by a self-policing industry.

While the FTC's recommendations got a cool reception by businesses, the Commerce Department's proposal got thumbs up. "Industry can address this issue of consumer privacy head on without being regulated by the administration," says Eric Peterson, chief executive of Web Analytics Demystified, a consulting company that helps businesses understand consumer data gathered from the Web. Peterson is a member of the Web Analytics Association and wrote the draft of the trade group's code of ethics. The code is pending approval by the membership.

Unlike the FTC rules, the Commerce Department's approach gives businesses more of a chance to prove they can act responsibly, Perterson says. "We are consumers too. We're advocating the way that we want to be treated as we do our holiday shopping and use the Internet."

The latest proposal also got the support of the Future of Privacy Forum, a U.S. public policy advocacy group founded by Christopher Wolf, a well-known lawyer who heads the privacy practice at the law firm Hogan & Hartson. "The report is a sophisticated effort to advance consumer privacy without thwarting innovation," the forum says in a statement.

Companies that complied with the rules developed by the Privacy Policy Office would be protected from complaints about their privacy practices. At the same time, the United States would have a privacy framework that would clearly define the practices of participating businesses that operate in other countries, the Commerce Department says.

The department's report also recommends a federal law that would set national standards for notifying consumers when a business suffers a security breach in which personal information is stolen. The law would supersede conflicting state laws.

The Commerce Department's recommendations will be passed on to Congress for consideration in its ongoing deliberations on how to ensure consumer privacy in Internet commerce.

SEE ALSO:

FTC Proposes 'Do Not Track' Option For Internet

FTC Divided Over Online 'Behavioral Targeting

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