Online Businesses Exposed to Lawsuits »
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Online businesses said Thursday that a Senate effort to limit what they can do with information they collect about customers would expose them to expensive lawsuits and hamper their success against bricks-and-mortar competitors.
Consumer groups, meanwhile, said the proposed legislation was a mostly balanced approach that would help curb privacy abuses on the Internet.
The bill, introduced last week by Senate Commerce Chairman Ernest Hollings, D-S.C., would require businesses to notify visitors to their Web sites about what information is collected and how it will be used.
Online businesses would have to get consumers' express permission before sharing sensitive information — like banking accounts, medical information, political or religious affiliation or Social Security numbers — with third parties. If a person finds sensitive data was misused and can prove they were harmed, the measure would allow them to sue for up to $5,000 for each use of the information.
Less sensitive, mostly marketing-related data, such as addresses, records of items purchased, user preferences and Web browsing histories, could be distributed unless the customer took the initiative to forbid it.
The Federal Trade Commission urged Congress two years ago to act on the issue. Several online privacy bills were introduced last year, but the issue faded after the Sept. 11 terrorist attacks renewed concern about the nation's overall security.
Hollings and other supporters said federally mandated privacy protections would help Internet businesses, not hurt them, by making consumers less wary.
"Privacy is essential to the economic well-being of the future of the Internet," said Sen. Conrad Burns R-Mont.
Marc Rotenberg, executive director of the Electronic Privacy Information Centre, said an even better bill would require consumer consent before any information is distributed and would make it easier for people to sue.
Industry groups once opposed any kind of privacy law, but now fear states will act first. They appeared ready to compromise on some type of national standards, and unanimously supported Hollings' proposal to enact federal standards that would override state laws.
But business representatives and some Republican senators on the panel insisted that any new law should apply to all companies, not just those operating on the Internet. Anything else would be unfair, adding protections only for the one percent of all consumer transactions that are conducted online, said Paul Misener, an Amazon.com vice president.
Industry officials also argued that the marketplace is a better regulator, because only those companies that institute strict privacy protections can be successful with consumers.
Companies especially dislike the provision that would give consumers the ability to review the information companies have about them, saying compliance would be extremely cumbersome and expensive. That requirement, and the threat of lawsuits, would make privacy notices even more unreadable as companies put protecting themselves from lawsuits above informing consumers.
"We see no additional benefits to our customers, either future or current," Misener said.
But Hollings warned that new protections were coming and urged compromise.
"Everyone is interested in privacy," Hollings said. "It's got to be managed and it will be managed, either by the states or the federal government. We cannot let the perfect be the enemy of the good."
Online businesses said Thursday that a Senate effort to limit what they can do with information they collect about customers would expose them to expensive lawsuits and hamper their success against bricks-and-mortar competitors.
Consumer groups, meanwhile, said the proposed legislation was a mostly balanced approach that would help curb privacy abuses on the Internet.
The bill, introduced last week by Senate Commerce Chairman Ernest Hollings, D-S.C., would require businesses to notify visitors to their Web sites about what information is collected and how it will be used.
Online businesses would have to get consumers' express permission before sharing sensitive information — like banking accounts, medical information, political or religious affiliation or Social Security numbers — with third parties. If a person finds sensitive data was misused and can prove they were harmed, the measure would allow them to sue for up to $5,000 for each use of the information.
Less sensitive, mostly marketing-related data, such as addresses, records of items purchased, user preferences and Web browsing histories, could be distributed unless the customer took the initiative to forbid it.
The Federal Trade Commission urged Congress two years ago to act on the issue. Several online privacy bills were introduced last year, but the issue faded after the Sept. 11 terrorist attacks renewed concern about the nation's overall security.
Hollings and other supporters said federally mandated privacy protections would help Internet businesses, not hurt them, by making consumers less wary.
"Privacy is essential to the economic well-being of the future of the Internet," said Sen. Conrad Burns R-Mont.
Marc Rotenberg, executive director of the Electronic Privacy Information Centre, said an even better bill would require consumer consent before any information is distributed and would make it easier for people to sue.
Industry groups once opposed any kind of privacy law, but now fear states will act first. They appeared ready to compromise on some type of national standards, and unanimously supported Hollings' proposal to enact federal standards that would override state laws.
But business representatives and some Republican senators on the panel insisted that any new law should apply to all companies, not just those operating on the Internet. Anything else would be unfair, adding protections only for the one percent of all consumer transactions that are conducted online, said Paul Misener, an Amazon.com vice president.
Industry officials also argued that the marketplace is a better regulator, because only those companies that institute strict privacy protections can be successful with consumers.
Companies especially dislike the provision that would give consumers the ability to review the information companies have about them, saying compliance would be extremely cumbersome and expensive. That requirement, and the threat of lawsuits, would make privacy notices even more unreadable as companies put protecting themselves from lawsuits above informing consumers.
"We see no additional benefits to our customers, either future or current," Misener said.
But Hollings warned that new protections were coming and urged compromise.
"Everyone is interested in privacy," Hollings said. "It's got to be managed and it will be managed, either by the states or the federal government. We cannot let the perfect be the enemy of the good."