FTC Proposes Online 'Do Not Track' Regime

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The Federal Trade Commission has endorsed adopting a "do not track" regime similar to the "do not call" list. That would give Web surfers a blanket opt-out from the preference tracking that allows behavioral marketers to target ads.

That was one of the recommendations in a just-released FTC staff report on a framework for balancing privacy with "innovation that relies on consumer information to develop beneficial new products and services."

FTC chairman Jon Leibowitz has consistently recognized the value of targeted online marketing, including the fact that it helps underwrite the free Web content users have come to expect.

The report recommends a "privacy by design" approach by industry, including "reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy."

The report also calls for opt in for sensitive information--health, finances--as well as for "material retroactive changes," which means if a company changes policy, according to an FTC spokesperson. For everything else, the report asks for public comment on whether opt in or opt out is the way to go.

The report was issued the day before a House hearing on whether it is time for "do not track" legislation. Obviously, FTC thinks it is--the vote on the report was 5-0, though with one commissioner stopping short of endorsing do not track.

Separately, Sen. John Kerry (D-Mass.), chairman of the Senate Communications Subcommittee, said he would propose legislation that would allow for safe harbor programs--another FTC suggestion--for companies that agree to the following: "First, all firms must put procedures in place to secure personally identifiable information. Second, consumers have a right to know in clear and concise terms what firms intend to collect, why, and how it will be used. Third, consumers should be given a simple mechanism for opting out of the process."

"The Federal Trade Commission's report should be a wakeup call for every Internet user in this country. The report confirms that many companies - both online and offline - don't do enough to protect consumer privacy," said Kerry.

While he said all firms should comply, he suggested the FTC could take a flexible approach to enforcing those basic principles. "We can take a hybrid approach to enforcement where the most critical rights are protected through rulemaking while others may be subject to a complaint and adjudication process," he said. "Those actors participating in safe harbor programs would be subject to FTC oversight and penalties, but because of their voluntary participation and commitment to high standards, they would be free from a private right of action and the complaint and adjudication process."