To say online privacy is a controversial area is an understatement. It’s always been challenging but has gotten even more so with the rise of social networks, online shopping, and targeted advertising.

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… 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.