New York Business Lawyers

FTC’s New Consumer Report Doesn’t Buy In to “Death” of #Privacy

by / Monday, 02 April 2012 / Published in Technology & eCommerce

Cloud Computing Business Legal Issues and ChecklistJust last week, the Federal Trade Commission (FTC) issued its much anticipated final report on consumer privacy protection: “Protecting Consumer Privacy in an Era of Rapid Change”.

Those who ballyhoo the death of privacy as we know it should take heed of the FTC Chairman, Jon Leibowitz, and his resort to words of Justice Louis Brandeis.  Quoting a 1928 decision that cast society’s right to privacy as a core constitutional principle, Leibowitz stated the Fourth and Fifth Amendments to the Constitution recognized that the right to be enjoy privacy is “the most comprehensive of rights and the right most valued by civilized men.”  Looks like the FTC is not going to let that notion enter its twilight in 2012.

The FTC’s report provided three guiding principles for future efforts at consumer privacy protection:

  1. Transparency. The FTC reiterates that companies bear the burden to disclose details about their collection and use of consumers’ information, and provide consumers access to the data collected about them.  In addition, the FTC makes the point such disclosures should be easier to digest and navigate.
  2. Privacy Not as Afterthought but by Design. Businesses should seek to bake in consumer privacy protection during the developmental stages of their applications and products.  These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy.
  3. Simplified Choice for both the End Consumer and Businesses. Consumers should be given clear and navigable choices with respect to how their personal data is used and shared and with whom. The FTC emphasized that no-one has the right to put anything on a consumer’s computer. Finally, the FTC acknowledged the strides being made in “Do Not Track” initiatives.

Some additional points of note:

Data Brokers: The FTC also makes the suggestion that legislation may be required to regulate so called: “data brokers”. Data brokers are those now increasingly essential consumer data clearing and storage houses that are part of the data food chain.  These brokers, as a result, may engage in the very same activities that define regulated credit and consumer reporting agencies, but without being subject to existing legislation or regulatory frameworks. Hence the FTC has requested that such data brokers collaborate to create a centralized database through which they will “(1) identify themselves to consumers and describe how they collect and use consumer data and (2) detail the access rights and other choices they provide with respect to the consumer data they maintain.”

Promoting Enforceable Self-Regulatory Codes: The FTC will work with the Department of Commerce and stakeholders to develop industry-specific codes of conduct. To the extent that strong privacy codes are developed, when companies adhere to these codes, the FTC will take that into account in its law enforcement efforts. If companies do not honor the codes they sign up for, they could be subject to FTC enforcement actions.

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