TrustArc Blog

A new federal privacy law on the horizon?

July 23, 2010

Elizabeth Frazee
Government consultant


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Yesterday I attended a hearing of the House Energy and Commerce Committee’s subcommittee on Commerce, Trade, and Consumer Protection that focused on two pending privacy bills in the House of Representatives. Seven witnesses testified about HR 5777, the Best Practices Act, introduced by the subcommittee’s Chairman, Representative Bobby Rush (D-IL) and draft privacy legislation authored by the Chairman of the Communications, Technology and the Internet Subcommittee, Representative Rick Boucher (D-VA) and cosponsored by that subcommittee’s ranking Republican Cliff Stearns (R-FL).

The panel of seven witnesses consisted of David Vladeck, Director of the FTC’s Bureau of Consumer Protection, three industry representatives, two consumer groups and an academic. There were some areas of agreement during the hearing and most of the focus remained on the Rush bill.

The issue around which most of the witnesses agreed was industry self-regulation. All but Ed Mierzwinski, Consumer Program Director of the U.S. Public Interest Research Group – the group consumer advocacy organization founded by Ralph Nader – thought that industry self-regulation is important and plays large role in addressing privacy concerns. The Best Practices Act is built around a self-regulatory safe harbor based on a universal opt out program to be developed through an FTC rulemaking. Safe harbor participants would not be required to get express consumer consent before sharing information with third parties required by the bill for all others.

NYU professor and former Microsoft privacy expert, Ira Rubenstein testified that safe harbors work best when a carrot and stick method is applied in order to create incentives for industry to participate in self-regulatory programs. Leslie Harris of the Center for Democracy and Technology (CDT) stated in testimony that CDT has long supported the inclusion of a strong private right of action in any privacy legislation. She noted that the CDT does not object to compliant participants in safe harbor programs from being exempted from the private right of action. Companies need to have some degree of assurance that meeting the standards approved by the FTC will insulate them from legal attack. If companies are in fact meeting those goals, they should not be subject to any legal action — either from government enforcers or private litigants.

The private sector witnesses, Mike Zaneis of the Interactive Advertising Bureau (IAB) and Jason Goldman of the US Chamber of Commerce, talked about the industry self-regulatory work already underway. In his written testimony, Zaneis mentioned TRUSTe’s experience in the area. He also noted that a fundamental change is already developing in the marketplace with industry self-regulation and said IAB is grateful that Rush recognized that in his bill. All agreed that industry safe harbors should be technology neutral and allow flexibility to change over time to better protect consumers. Many felt that this could be achieved by giving the FTC rulemaking authority to implement safe harbors. There also was widespread support for safe harbors and self-regulation expressed by the members of the subcommittee who attended the hearing.

While the majority of members attended the beginning of the hearing to give opening statements and hear the witness testimony, only Chairman Rush and ranking Republican Whitfield remained for the question and answer period. Each went through several rounds of questions mostly focused on the Rush bill. At the end of the hearing Chairman Rush noted that he was aware that his bill had only been introduced four days ago, however, he said that it will move and predicted that “it will become law.” Chairman Rush didn’t predict “when ” the bill will be enacted. By my count there are approximately just three weeks before the midterm elections when the House will be in session working on legislative business. I’ll wager that this issue will be waiting when Congress returns in 2011.