White House and Advertisers Announce New Consumer Privacy Standards

This is shaping up to be the year when we might finally see the emergence of a comprehensive set of principles to govern privacy issues online.  (Who would’ve thought?)

On February 23, 2012, the White House announced what it calls a “Consumer Privacy Bill of Rights.”  President Obama calls it a “blueprint” that will help quell fears that might otherwise dissuade consumers from continuing to use online services.  The announcement was timed to coincide with a new standard for “do not track” policies adopted by the Digital Advertising Alliance (DAA), a consortium of the nation’s largest media and marketing associations including the American Association of Advertising Agencies (4A’s), the Association of National Advertisers (ANA), the American Advertising Federation (AAF), the Direct Marketing Association (DMA), the Interactive Advertising Bureau (IAB) and the Network Advertising Initiative (NAI).

The moves have been a long time in coming.  The DAA launched its Self-Regulatory Program for Online Behavioral Advertising (of which this latest effort is a part) in 2009, and has been coordinating on privacy and transparency issues with the Federal Trade Commission (FTC) ever since.

The White House laid out the details of its Consumer Privacy Bill of Rights (CPBR) in a lengthy report.  As conceived by that document, the CPBR applies to personal data, which means any data, including aggregations of data, which is linkable to a specific individual. Personal data may include data that is linked to a specific computer or other device. The Administration plans to use these rights as a template for codes of conduct that are enforceable by the FTC and that are meant to bring US law more in line with European and other nations.

The CPBR contains the following seven basic principles, which are taken verbatim from the report:
1. INDIVIDUAL CONTROL: Consumers have a right to exercise control over what personal data companies collect from them and how they use it. Companies should provide consumers appropriate control over the personal data that consumers share with others and over how companies collect, use, or disclose personal data. Companies should enable these choices by providing consumers with easily used and accessible mechanisms that reflect the scale, scope, and sensitivity of the personal data that they collect, use, or disclose, as well as the sensitivity of the uses they make of personal data. Companies should offer consumers clear and simple choices, presented at times and in ways that enable consumers to make meaningful decisions about personal data collection, use, and disclosure. Companies should offer consumers means to withdraw or limit consent that are as accessible and easily used as the methods for granting
consent in the first place.

2. TRANSPARENCY: Consumers have a right to easily understandable and accessible information about privacy and security practices. At times and in places that are most useful to enabling consumers to gain a meaningful understanding of privacy risks and the ability to exercise Individual Control, companies should provide clear descriptions of what personal data they collect, why they need the data, how they will use it, when they will delete the data
or de-identify it from consumers, and whether and for what purposes they may share personal data with third parties.

3. RESPECT FOR CONTEXT: Consumers have a right to expect that companies will collect, use, and disclose personal data in ways that are consistent with the context in which consumers provide the data. Companies should limit their use and disclosure of personal data to those purposes that are consistent with both the relationship that they have with consumers and the context in which consumers originally disclosed the data, unless required by law to do otherwise. If companies will use or disclose personal data for other purposes, they should provide heightened Transparency and Individual Control by disclosing these other purposes in a manner that is prominent and easily actionable by consumers at the time of data collection. If, subsequent to collection, companies decide to use or disclose personal data for purposes that are inconsistent with the context in which the data was disclosed, they must provide heightened
measures of Transparency and Individual Choice. Finally, the age and familiarity with technology of consumers who engage with a company are important elements of context. Companies should fulfill the obligations under this principle in ways that are appropriate for the age and sophistication of consumers. In particular, the principles in the Consumer Privacy Bill of Rights may require greater protections for personal data obtained from children and teenagers than
for adults.

4. SECURITY: Consumers have a right to secure and responsible handling of personal data. Companies should assess the privacy and security risks associated with their personal data practices and maintain reasonable safeguards to control risks such as loss; unauthorized access, use, destruction, or modification; and improper disclosure.

5. ACCESS AND ACCURACY: Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate. Companies should use reasonable measures to ensure they maintain accurate personal data. Companies also should provide consumers with reasonable access to personal data that they collect or maintain about them, as well as the appropriate means and opportunity to correct inaccurate data or request its deletion or use limitation. Companies that handle personal data should construe this principle in a manner consistent with freedom of expression and freedom of the press. In determining what measures they may use to maintain accuracy and to provide access, correction, deletion, or suppression capabilities to consumers, companies may also consider the scale, scope, and sensitivity of the personal data that they collect or maintain and the likelihood that its use may expose consumers to financial, physical, or other material harm.

6. FOCUSED COLLECTION: Consumers have a right to reasonable limits on the personal data that companies collect and retain. Companies should collect only as much personal data as they need to accomplish purposes specified under the Respect for Context principle. Companies should securely dispose of or de-identify personal data once they no longer need it, unless they are under a legal obligation to do otherwise.

7. ACCOUNTABILITY: Consumers have a right to have personal data handled by companies with appropriate measures in place to assure they adhere to the Consumer Privacy Bill of Rights. Companies should be accountable to enforcement authorities and consumers for adhering to these principles. Companies also should hold employees responsible for adhering to these principles. To achieve this end, companies should train their employees as appropriate to handle personal data consistently with these principles and regularly evaluate their performance in this regard. Where appropriate, companies should conduct full audits. Companies that disclose personal data to third parties should at a minimum ensure that the recipients are under enforceable contractual obligations to adhere to these principles, unless they are required by law to do otherwise.

The Report also calls on Congress to codify the Consumer Privacy Bill of Rights into law that would:

  • Allow the FTC and state Attorneys General to enforce the law directly (there is no mention of a private right of action).
  • Pre-empt state privacy laws that are inconsistent with the Consumer Privacy Bill of Rights.
  • Avoid prescribing technology-specific means of complying with the law’s obligations.
  • State companies’ obligations under the Consumer Privacy Bill of Rights with greater specificity than the Bill of Rights provides.
  • Establish a safe harbor from enforcement for companies that adhere to voluntary codes of conduct that the FTC has reviewed and adopted.
  • Set a national standard for security breach notification.

What do you think?   Are these principles a step forward, or needless government interference in the market?