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Steven C. Bennett

A Lawyer's Look at the FTC's Privacy Report

6/28/2012 11 comments
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In March, the Federal Trade Commission issued its final report on Internet privacy, "Protecting Consumer Privacy in an Era of Rapid Change" (PDF). Though it does not carry the force of law, the report urged Congress to enact general legislation on privacy, data security, and data brokers, and it encouraged companies that handle consumer data to incorporate simpler, more transparent privacy protection options for their customers.

The report was the result of a collaborative process, incorporating comments the FTC received from more than 450 corporate representatives, privacy advocates, and consumers in response to a preliminary report released in December 2010. The final report focused on three themes, reiterated throughout the report, and the FTC's recommendations for best-practices.

  • Privacy by design: Companies should promote consumer privacy throughout their organizations by incorporating "substantive privacy protections" in areas such as data security, collection limits, retention and disposal policies, and data accuracy. Companies also should maintain "comprehensive data management procedures throughout the life cycle of their products and services" to ensure that privacy practices remain robust.
  • Simplified consumer choice: Companies need not provide consumers a choice before collecting data for practices "consistent with the context of the transaction or the company's relationship with the consumer." But where required, choice should be offered "in a context in which the consumer is making a decision about his or her data." Where data use materially differs from the manner described at collection, the change should require express consent.
  • Transparent data collection: Privacy notices should be "clearer, shorter, and more standardized to enable better comprehension and comparison," and companies should provide reasonable and proportionate access according to the type of data they maintain. Companies should also increase efforts to "educate consumers about commercial data privacy practices."

In addition to these themes, the FTC indicated five action items that were of special concern to the agency.

  1. Do Not Track: The importance of sustained collaboration between government and industry was underscored, even though the FTC praised browser vendors for developing tools to limit third-party data collection.
  2. Mobile: At a workshop it hosted in May 2012, the agency urged mobile service companies to address advertising and privacy issues, such as developing shorter, more meaningful disclosures.
  3. Data brokers: A centralized Website should be created to identify data brokers and disclose their practices.
  4. Large platform providers: The FTC singled out Internet service providers, Web browsers, operating systems, and social media tools for their ability to "comprehensively track consumers' online activities." The agency will host a workshop this year to address this issue.
  5. Promoting enforceable self-regulatory codes: The FTC vowed to help develop "sector-specific codes of conduct," and it indicated that company adherence to such codes will influence FTC enforcement efforts.

The FTC has also restated its desire to collaborate with the Department of Commerce and the White House, which released its own policy report in February 2012. That report, "Consumer Data Privacy in a Networked World" (PDF), outlined a Consumer Privacy Bill of Rights that would expand and clarify the legal landscape relating to consumer privacy, while making the FTC a privacy enforcement agency. Any expansion of the FTC's authority would depend on congressional action.

[Disclosure: The author is a partner in the New York offices of Jones Day. Andrew S. Burchiel, a summer associate at the firm, assisted in the preparation of this article. The views expressed are solely those of the author and should not be attributed to the author's firm or its clients.]

Related posts:

— Steven C. Bennett is a partner in the New York City offices of international law firm Jones Day.

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nimantha.de
IQ Crew
Friday July 6, 2012 10:54:06 PM
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What is the job role of a lawyer ? Simply making things look right. So if the party he or she is doing thewrong thing, what the lawye has to do is to make it look right. Thats whats happening.

scbennett
Thinkernetter
Sunday July 1, 2012 6:12:13 PM
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The FTC (among others) has been pushing public education as one means to improve the climate of privacy protection.  There are, of course, many simple measures that consumers (and others) can take to help protect their own privacy, many of which may be as effective as anything the government can conceive.  The FTC, for example, in its recent report praises the use of "do not follow" software on internet search software. 

KMT568
IQ Crew
Sunday July 1, 2012 6:01:48 PM
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Yes...people are willing to give up privacy for little until something happens that bothers them (i.e. their info lands in a shady website or they get hacked). A mentality shift needs to happen in order for things to change.

scbennett
Thinkernetter
Sunday July 1, 2012 5:23:23 PM
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There have been a lot of suggestions for how to make privacy notices simpler / more understandable:

1.Establish some sort of rating code, so that levels of privacy (A, B, C) could be easily understood.

2. Establish some form of tagging system, making policies machine readable, and let the machines do the coding / rating.

3. Establish privacy zones on the internet (perhaps using new suffixes, like .prv for "private"), which can only be used by those who meet essential standards.

The real problem with all of these is that, on the whole, even though consumers SAY they want privacy protection, they are not willing to DO a lot to protect privacy, and they are willing to GIVE UP privacy for relatively little in return.

slfisher
Thinkernetter
Saturday June 30, 2012 11:57:36 PM
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now, everyone who believes that's going to happen, please poke out your right eye. Especially if Republicans get elected this November.

KMT568
IQ Crew
Saturday June 30, 2012 1:44:41 PM
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I'm not sure what you mean by your comment. Yes, lawyers draw up contracts and terms, but if these terms are to be read by a broad audience, shouldn't the language be suited to that audience?

nathanwosnack
IQ Crew
Saturday June 30, 2012 2:35:48 AM
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In what aspects do you see lawyers doing things?

nimantha.de
IQ Crew
Saturday June 30, 2012 12:25:39 AM
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Well I may be wrong on this staement but I feel lawyers do look into things in a different aspect. It may be because of their job role that they have to think the other way round if its wong or right to make things wrong look ight but if so thee is no justice in this world.

KMT568
IQ Crew
Friday June 29, 2012 4:45:54 PM
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Privacy notices should be "clearer, shorter, and more standardized to enable better comprehension and comparison," and companies should provide reasonable and proportionate access according to the type of data they maintain. Companies should also increase efforts to "educate consumers about commercial data privacy practices."

One of the things users don't do is read the privacy notices, and if the language was clearer and simpler, that might change. Use of simple language is common business practice and people don't like to try and navigate legalese.

scbennett
Thinkernetter
Friday June 29, 2012 9:13:52 AM
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The FTC has investigated in this area (studies, conferences, reports) for more than a decade, and has taken some actions based on its power to prevent "deceptive" trade practices, but (to date) the FTC has not received a mandate from Congress to regulate directly in the privacy arena.  Indeed, there is no single national privacy-protection agency in the USA.  To a degree, our system of federalism (states' rights) and check-and-balance division of power favors that approach.  But one result is that we have something of a patchwork quilt of privacy laws, which may not always provide adequate protection for individuals, and at the same time can produce uncertainty (and therefore extra cost and burden) for businesses.  The Europeans seem to have the problem in reverse.  There is a supranational privacy directive, which applies to all the EU member states, but each country determines for itself how much enforcement effort to put behind the directive.  And individual states vary in their interpretations of the directive.  The problem of defining and enforcing privacy rights may be inherent in any political system.  Much of the discussion of "co-regulation" of privacy (with industry proposing rules, and government essentially backstopping enforcement of the rules) is an attempt to compromise on that inherent problem.

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