The companies involved blame the consumers for not utilizing the tools that are in place. Consumers, on the other hand, think that companies need to be clearer on what they’re collecting and how they can opt-out if they want.

Should consumers or companies be blamed for online privacy concerns? Is one side at fault, or is it both, or neither? What do you think?

The debate over these areas is heating up again with the Commerce Department and the FTC expected to release reports on how to improve online privacy in the next couple of weeks. WebProNews spoke with Jules Polonetsky, the Director of the Future of Privacy Forum, who told us that the Commerce Department’s report was worth noting since it would outline where the Obama administration stands on the issue. Interestingly, no acting President or administration has ever before introduced or endorsed a federal privacy law.

Polonetsky told us that it was “highly unlikely” the U.S. would see privacy legislation this year but said that it would happen in the future.

“I think it’s clear that we are going eventually going to have a privacy law,” he said. “The question is, whether it’s gonna be a good one.”

“If we are able to craft privacy law that supports innovation [and] gives users more protection, we’ll win,” he added.

According to Polonetsky, the goal of the Commerce Department and President is to create a framework, in which companies and advocates develop rules for their own industries. If the FTC thinks these rules are adequate, they can create a safe harbor and make them enforceable.

There are, however, questions that remain since the administration may target certain companies and topics. In addition, there is the question of whether companies and consumer advocacy groups will agree to work together.

Up to this point, many of the people and groups that have spoken out against privacy legislation have said that tools already exist that allow consumers to take control. While Polonetsky said that consumers should be more proactive when it comes to sharing data and using online tools, he also said that companies should make it easy for consumers.

“If companies really got serious about delivering first for users, we wouldn’t need some of the proposals that are out there,” he said.

Through his experience as Chief Privacy Officer for both AOL and DoubleClick, Polonetsky told us that some companies understand privacy concerns and some don’t. There are also companies that want to “push the envelope” in a way that encourages others to do so as well.

Some companies believe that a self-regulatory approach would be much better than federal legislation, but according to the FTC’s first draft, the self-regulatory measures in place at that time were inadequate. Polonetsky said that, if companies really are against a national law, they need to prove that they are self-regulating.

“Any company that wants to avoid legislation ought to be really pushing to show how it is self-regulating,” he said.

On the consumer side, some don’t mind the tracking when it benefits them. For instance, many Amazon users like that the company sends them deals for items they want to buy.

“Let the users in, and guess what, they may be more than happy for you to know them well, if what you’re doing is making money serving them well,” Polonetsky pointed out.

Another angle to this saga is the fact that the European Commission is reportedly going to change its privacy directive as well. Polonetsky told us that the White House and Commerce Department pay attention to what Europe is doing because, over there, privacy is considered a human right. Historically, whatever Europe puts into law, the other countries follow suit. For this reason, the U.S. wants to show Europe that it is serious about privacy.

Although Polonetsky does not expect a privacy law during 2012, he did tell us that the year would bring lots of scrutiny for companies and lots of hearings.

“I’ve never seen as much scrutiny,” he said.

Even though the debate is nowhere near being over, the FTC and Commerce Department reports should shed some light into what we can expect going forward.

Are you in favor of privacy legislation, or would you prefer self-regulation in industries? Let us know.

The organizations including the Consumer Federation of America, Electronic Frontier Foundation, Consumer Watchdog, World Privacy Forum, Consumer Action, USPIRG, Privacy Rights Clearinghouse, Privacy Times, Privacy Lives, and the Center for Digital Democracy, raised their concerns in a letter to Subcommittee Chairman Rick Boucher and Ranking Member Cliff Stearns.

The groups said in a letter that because consumers increasingly rely on the Internet and other digital services for a variety of transactions involving sensitive personal data, that the draft privacy bill needs to be strengthened.

The groups recommended the following:

*The bill should incorporate the Fair Information Practice Principles that have long served as the bedrock of consumer privacy protection in the U.S., including the principle of not collecting more data than is necessary for the stated purposes, limits on how long data should be retained, and a right to access and correct one’s data.

*The bill’s definitions of what constitutes "sensitive information" need to be expanded; for instance, to include health-related information beyond just "medical records."

*The bill should require strict "opt-in" procedures for the collection and use of covered data and should prohibit the collection and use of any sensitive information except for the transactions for which consumers provided it.

"Consumers online are being stealthily tracked, profiled and targeted by marketers – who are able to obtain personal information regarding their finances, health, ethnicity, and their families," said Jeff Chester, Executive Director of the Center for Digital Democracy.

"The public should not be placed at risk as they grow to rely on the Internet and mobile phones when making purchases and searching for information. Reps. Boucher and Stearns have launched an important debate that must lead to real privacy safeguards for consumers. Both political parties should work together to revise this proposal and enact landmark 21st Century consumer protection legislation."
 

The DMA says the draft bill has potentially sweeping impacts for direct marketers working across every marketing channel, from direct mail and telemarketing to email, Internet and, mobile marketing.

"DMA and other trade associations are in the process of implementing a significant new self-regulatory program that applies consumer-friendly standards to online behavioral advertising across the Internet, giving consumers meaningful notice and choices about the advertising they receive," said Linda Woolley, DMA’s executive vice president, government affairs. 

"We should give this program a chance to work before legislating in this area.  We look forward to working further with Representatives Boucher and Stearns, as well as other lawmakers, to find the appropriate balance between consumer privacy and business innovation so that Internet commerce can continue to be a driving force for job creation in this difficult economy."

Boucher says the draft bill is not aimed at hampering the use of advertising content and services on ecommerce sites.

"Online advertising supports much of the commercial content, applications and services that are available on the Internet today without charge, and this legislation will not disrupt this well established and successful business model. It simply extends to consumers important baseline privacy protections," Boucher said.
 

Locke also announced the formation of an Internet Policy Task Force to identify public policy and operational issues impacting the private sector’s ability to realize the potential for economic growth and job creation via the Internet.

"Because of the vital role the Internet plays in driving innovation throughout the economy, the Department has made it a top priority to ensure that the Internet remains open for innovation while promoting an environment respectful of individual privacy expectations," Locke said.

"In these difficult economic times, nothing is more important to American prosperity than jumpstarting our engine of innovation."

Through a Notice of Inquiry (NOI), the Commerce Department is asking for public comment from companies, academics and consumers to weigh in on whether current privacy laws serve consumers interests.

The Task Force is made up of staff members from the National Telecommunications and Information Administration (NTIA), the International Trade Administration (ITA), the National Institute of Standards and Technology (NIST) and the Patent and Trademark Office (PTO), and will be coordinated through the Commerce Department’s Office of Policy and Strategic Planning, which reports to the Secretary.

In addition to privacy and innovation, the Internet Policy Task Force will examine cyber security, online copyright protection and international barriers to moving data around the globe, and the ability of entrepreneurs, and small- and medium-sized businesses to expand their operations via the Internet.

The Department will hold a public meeting May 7 to discuss privacy policy. After reviewing comments, the Department will release a report about managing domestic privacy policy.
 

"We are writing to express our concern over claims that Google’s ‘Google Buzz’ social networking tool breaches online consumer privacy and trust," said Congressman Barrow.

"Due to the high number of individuals whose online privacy is affected by tools like this – either directly or indirectly – we feel that these claims warrant the Commission’s review of Google’s public disclosure of personal information of consumers through Google Buzz," said Congressman Barrow.

The letter to the FTC highlights the need for companies to include consumer privacy protections and online safety measures as they develop new technology online and gain access to more consumer information. Congress man Barrow and other members of the Energy and Commerce committee asked a number of questions to assist in the evaluation of online privacy practices and to protect consumer data.

The letter comes after a number of consumer complaints concerning Google Buzz, including cases where users’ private information was publicly disclosed without their notice or consent.

The Electronic Privacy Information Center ("EPIC") has filed a complaint with the Federal Trade Commission claiming that Google Buzz engaged in unfair and deceptive practices that violated Google’s privacy policy, user expectations of privacy, and federal wiretap laws.
 

The proxy lets users browse websites anonymously, without sharing any private, personally identifiable information to the websites they view.

When users conduct a search on Startpage they will see a clickable "proxy" option below each search result. When this option is selected, Startpage acts as a go-between to retrieve the page and display it in a privacy- protected window.

The proxy offers complete anonymity, since the user never makes direct contact with the third-party website. The user’s IP address is invisible to the viewed website. In addition, the website cannot see or place cookies on the user’s browser.

"People are more concerned about online data retention policies than ever before," said CEO Robert Beens.

"We wanted to offer them a useful tool and this proxy is a logical extension of our services. A search engine is a starting point for people to visit other pages. Now our users can take the privacy they get with Startpage to the next step, and go privately to the sites they have found as well. This proxy completes the total search privacy picture."

 Startpage says it does not record IP addresses, make a record of users’ searches, or record details about proxy usage.

Related Articles:

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> Mozilla Exec Moves To Bing’s Corner

> Yahoo Lets Users See How They’re Being Tracked for Ads

Concern about online privacy is common among all age segments, and increases with the respondent’s age from 67.3 percent among those 18-24 years to 85.7 percent of those 55 years and older.

Online privacy is a prevailing concern for web surfers," said Chuck Moran, VP of Marketing for Burst Media. "Advertisers must take concrete actions to mitigate consumers’ privacy concerns and at the same time continue to deliver their message as effectively as possible."

"In addition and as recently seen in the news flare up regarding Facebook’s privacy controversy, publishers need to be completely transparent about their privacy policies."

The survey also found that most Internet users believe Web sites are tracking their behavior online. More than half (62.5%) of respondents believe it is likely that a site they visit collects information on how they navigate and interact with it.

Most Internet users are not willing to give up their personal privacy for more relevant advertising. Based on the description "advertisements more relevant to interest," only 23.2 percent of respondents would not mind if non-personally identifiable information was collected if ads were better targeted.

The poll found that 82 percent of people are concerned about their credit card numbers being stolen online, while 72 percent are concerned that their online activity is being tracked and profiled by companies.

Over two-thirds (68%) of Americans have provided personal information to gain access to a Web site, but 53 percent said they were not comfortable with Internet companies using their email content or browsing history to send relevant ads, and 54 percent are uncomfortable with third parties collecting information about their online behavior.

The overwhelming majority (93%) of people think Internet companies should always ask permission before using personal information and 72 percent want the right to opt out when companies track their online behavior.

"Americans are clearly concerned with how their personal information is being collected and used by Internet companies," said Joel Kelsey, policy analyst with Consumers Union. "The vast majority of consumers want more control over their personal information online and want the ability to stop internet companies from tracking and profiling them."

The poll shows that people are taking steps to limit the information that is being compiled and shared about them online. Thirty- five percent use alternate email addresses to avoid providing real information; 26 percent use software that conceals their identity; and 25 percent have provided bogus information to access a Web site.

People are aware that information about their surfing habits is being collected online, but many do not know what companies do with their information.

The majority (61%) believe what they do online is private and not shared without their permission. Just over half (57%) falsely believe that companies are required to identify themselves and indicate why they are collecting data.

Just under half (48%) incorrectly believe their consent is required for companies to use personal information they collect from online activities and 43 percent wrongly believe a court order is needed to monitor activities online.

"Many consumers have misconceptions about the information available about them and how commonly it is sold by companies without their knowledge," said Kelsey. "Our poll makes clear that consumers want more control over the treasure trove of information companies are collecting about their activities online."

The new opt-out feature is part of Yahoo’s response to a Congressional inquiry about customization sent to 33 Internet asking for details about targeted advertising and how they collect and store information on users.

"Yahoo! strongly believes that consumers want choice when customizing their online experience and they have also demonstrated a strong preference for advertising that is more personally relevant to them," said Anne Toth, head of privacy and VP for policy.

"However, we understand that there are some users who prefer not to receive customized advertising and this opt-out will offer them even greater choice."

Yahoo’s new opt-out capability will be available to users by the end of August. They will be able to access the opt-out in the company’s privacy center, which is linked on the home page. Users will also be able to access the opt-out through a link in the public service advertising campaign Yahoo has been running with online ads on its network to educate users about customized advertising.
 

The Senate has turned to Google, Microsoft, the FTC, Facebook, privacy watchdogs and others for their opinions in the matter. Some, like Google, welcomed a “comprehensive privacy law that would establish a uniform framework for privacy and procedures to punish bad actors.”

The FTC, on the other hand, believes that the industry could self-regulate: “The commission is cautiously optimistic that the privacy issues raised by online behavioral advertising can be effectively addressed through self-regulation.”

Perhaps most interesting, though, were the senators’ opinions. The New York Times reports:

“We have a solution in search of a problem,” he [Sen Jim DeMint, R-SC] said [in response to the FTC's proposal], noting that Internet companies are developing various ways to protect the privacy of users. “By the time the F.T.C. acts, the industry would be far ahead,” he said.

One legislative question largely unaddressed was whether Congress should set standards for how Internet service providers monitor the actions of their users to create information for advertising. [CEO of the Center for Democracy and Technology, Leslie] Harris alone called for such a law.

Senator Byron Dorgan, the Democrat of North Dakota who chaired the hearing, said he had invited representatives of Internet providers to discuss the issue and they declined. So he said he would schedule another hearing entirely devoted to hearing from the I.S.P.s about their advertising plans.

I think Dorgan’s right—ISPs seem to be a bigger issue lately. Because while Google, Facebook and their ilk have collected substantial data on us, it’s almost always been because we volunteered it to them, registered with them, etc. But does owning the “pipe” give an ISP the right to observe what you’re doing and change content based on that activity?

The Senate plans to continue investigating throughout the year. I guess this just goes to show you—not everyone in Congress would describe the Internet as “a series of pipes” .

What do you think? Should the Senate pass a law in this area, or will the FTC and the industry step up? And where do ISPs fall in here?

(Link to the full text of the hearings via SEL.)

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