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No Rush to Privacy Judgment: Rush

Bobby Rush, chairman of the House Energy & Commerce Committee's Trade and Consumer Protection Subcommittee, said Thursday that he knows there is no free lunch and that online advertising often pays for that lunch.

Still, he thought it was imperative before the August recess to address online privacy concerns and ways to craft safeguards to address foreseeable violations of consumer privacy, suggesting those isolations should not be part of that lunch tab.

That came at a July 22 hearing in the House Energy & Commerce Committee's Trade and Consumer Protection Subcommittee on a pair of bills on online privacy and the collection and disclosure of personal information, including for the kind of targeted behavioral advertising that is becoming increasingly a part of the media mix.

The hearing, which was in recess at press time for House votes, was chaired by Rush, author of one of the bills, the Best Practices Act (HR 5777 ), which was introduced last week. The other bill, currently in draft form, is backed by Rep. Rick Boucher (D-Va.), chair of the Communications Subcommittee, and ranking member Cliff Stearns (R- Fla.).

They would require companies to get Web surfers' permission to collect sensitive information--health, finances--or share less sensitive (but still personal) information with third parties. They would also require an opt-out regime for other personal information collection. The bills were not being greeted with unalloyed support by either industry or consumer watchdog groups.

For example, in his testimony, Edmund Mierzwinski of U.S. PIRG, argued that the bills "don't address the massive growth in data collection," and "largely sanction the existing and worsening regime of ongoing collection, analysis and use of off-and online data, through the industry-preferred regime of notice and choice." He suggested the bill's provisions were essentially being grafted on.

On the other side, industry bill watchers are concerned that companies that violate the notice/consent policies could be fined $1,000 per violation up to $5 million, though they like the proposal of a "safe harbor" for companies that agree to self-regulation overseen by the Federal Trade Commission.

The bill gives the FTC rulemaking authority in the privacy area, including imposing those civil penalties. Ranking member Edward Whitfield (R-Ky.) said he was concerned about the "latitude" the bills gave the FTC, as well as the possibility that lawyers would create a cottage industry in manufactured cases. "It is difficult for Congress to be involved in every nuance of privacy," he said.

Perhaps, but David Vladeck, director of the Bureau of Consumer Protection at the Federal Trade Commission, said he thought Congress should consider getting involved in mandating short, easy-to-read notifications at "the right moment," which would be the point of data collection.

He cited an online gaming site that had tested its user's attention to privacy policies by including language that said that use of the game "guaranteed the company the nontransferable option to claim for now and for evermore your immortal soul." Vladeck said 7,500 people made that bargain. "I don't believe these consumers really meant to transfer [those rights]" he said.

Rep. Cliff Stearns had concerns with Rush's bill, including what he said was an overbroad definition of covered information and the civil penalties. He said it would be better to focus on a workable self-regulatory structure--Mierzwinski countered that self regulation "has not worked."

At the hearing, Stearns also complained that the hearing on the bill came only four days after it was introduced. He said he and his staff needed more time to vet it.

Rush countered that there would be necessary time to deliberate the bill and that he was in no way trying to rush--no pun intended, he added--to judgment. "But discussion has to end sometime. Now is the time for the discussion to end and the work to begin," he said.

But it was not only Republicans raising caution flags.

Rep. Kathy Castor (D-Fla.) agreed that there needed to be rules in place to give consumers control over their information. "Consumers want simple explanations," she said, adding that there are millions of new businesses created as a result of sharing information, including most online businesses, and that they must be allowed to "grow and flourish."

Mike Zaneis, vice president, public policy, Interactive Advertising Bureau, seconded that. He said that his members, from portals to ad nets to mom and pop online shots depended on online advertising to generate their $6 billion in revs for the first quarter of 2010, generate more than $300 billion in economic activity, and 3.1 million jobs.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.