Web-Privacy Bill Coming

Top House and Senate Democrats are working on legislation that would prevent online marketers from sharing Web-surfing information unless Internet users allowed them to.

That’s according to House Communications, Technology and the Internet Subcommittee chairman Rick Boucher (D.-Va.), who told Multichannel News  that such a bill was in the works and was one of his top legislative priorities.

The issue of online behavioral marketing has gained traction recently, spurred by privacy concerns and by media companies’ need to find new ways for advertisers to reach aggregated audiences at a time of fragmented viewing and multiplying delivery platforms.

Boucher’s predecessor atop the committee, Rep. Edward Markey (D-Mass.), held a hearing last fall on the issue and helped quash a test by ad-tracking company NebuAd and cable operator Charter Communications.

In an interview, Boucher said he was teaming with Reps. Cliff Stearns (R-Fla.), ranking member of his subcommittee, and Joe Barton (R-Texas), ranking full committee member, on a bill that would apply “across the board” to behavioral advertising and data collection by Web sites.

“The goal would be to give the Internet user a sense that information about him that is collected by Web sites is well understood by the user, so he has an opportunity to know what is collected,” Boucher said. “He would then have an opportunity to act in a way that prevents that Web site using that information to market him personally, and an even broader opportunity to prevent the transfer of that information about him to third parties.”

Boucher envisions a combination of opt-in and opt-out requirements.

“Opt-in would apply where the information is conveyed to third parties,” he said, while “opt out would apply where the Web site that collects the information is using that information directly to market the customers from whom it is collected.”

Center for Digital Democracy executive director Jeff Chester was pleased at the news. He has long advocated more government regulation of targeted behavioral marketing, including requiring an opt-in model that protects privacy.

“Chairman Boucher clearly understands the need for Congress to protect the privacy of U.S. consumers,” Chester said. “If consumers had known a few years ago that their information was being collected surreptitiously online so they could be behaviorally targeted for high-priced mortgages and loans, some of the current financial crisis might have been avoided.”

Chester suggested Boucher is not going far enough, though.

“We are calling on Chairman Boucher to ensure that all Web sites offer consumers opt-in — not just the ones that send the data to third parties,” Chester said. “Every Web site should be required to respect the privacy of consumers. Giving first-party sites an opt-out-only rule is a copout. Chairman Boucher needs to ensure his bill also truly protects consumers by requiring Web sites to explain when the interactive advertising has been created to work in a stealth-like manner.”

Adonis Hoffman, senior vice president and counsel to the American Association of Advertising Agencies, said he doesn’t think legislation is needed.

“There is probably an effective way to balance two seemingly competing interests without legislation,” he said. “What about a framework that empowers consumers to protect their data on the one hand, yet allows marketers to advertise based on what is relevant and of interest to that consumer, on the other hand — all underpinning free content online? This can’t be far away, and is probably on the launching pad as we speak.”

Hoffman said marketers already have an incentive to get it right without legislation or regulation. “I suspect that is the intent of the [Federal Trade Commission] guidelines for self-regulation in this area, which the industry is taking quite seriously.”

The FTC last month released a report that revises and extends guidelines for online marketing and privacy protection it issued for public comment in December 2007. It urged the industry to voluntarily adopt an opt-in model for releasing sensitive information, including on finance, kids, and health.

Jon Leibowitz, an FTC commissioner and President Obama’s pick as the next chairman, warned that adopting these voluntary guidelines could be the only alternative to government intervention.

“Industry needs to do a better job of meaningful, rigorous self-regulation, or it will certainly invite legislation by Congress and a more regulatory approach by our commission,” Leibowitz said. “Put simply, this could be the last clear chance to show that self-regulation can — and will — effectively protect consumers’ privacy in a dynamic online marketplace.”

For more of Boucher’s interview, please see Multichannel.com.

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.